Publications by Topic
Topic: 2003 Legislation
Bush Administration Tax Policy: Summary and Outlook (Article/Tax Break)
Author(s):
William G. Gale , Peter Orszag
This is the eighth and final installment in a series that evaluates tax policy in the Bush Administration, covering the years 2001 to 2004. The paper summarizes our principal findings, and discusses some of the key tax and fiscal issues facing the Administration in its second term.
Published: 11/29/04
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Bush Administration Tax Policy: Short-Term Stimulus (Article/Tax Break)
Author(s):
William G. Gale , Peter Orszag
This paper examines the effects of recent tax cuts as a short-term economic stimulus. The passage of the tax cuts was well-timed to offset economic downturns, but several elements of the structure of the tax cuts were poorly designed to provide short-term stimulus. For example, the tax cuts were predominantly back-loaded and did not channel funds toward groups with the highest marginal propensity to consume additional resources. Many provisions were intended to stimulate saving, not consumption. As a result, the tax cuts had at best a small "bang for the buck" relative to other options. An alternative package one containing significant state fiscal relief and tax cuts targeted at low-income households could have provided more stimulus with lower budgetary costs. The tax cuts played a relatively minor role in the economic recovery, compared to monetary policy and other factors.
Published: 11/01/04
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Bush Administration Tax Policy: Effects on Long-Term Growth (Article/Tax Break)
Author(s):
Peter Orszag , William G. Gale
Tax policy can raise growth in the long run increasing the level and improving the allocation of labor and capital inputs. The net effect of the recent tax cuts on growth is theoretically uncertain and is the net effect of (a) the generally positive effects induced by lower marginal tax rates, (b) the negative effects induced by higher budget deficits. Several studies have quantified the various effects noted above in different ways and used different models, yet all have come to the same conclusion: Making the tax cuts permanent is likely to reduce, not increase, national income in the long term unless the reduction in revenues is matched by an equal reduction in unproductive government consumption expenditures. Even in that case, a positive impact on long-term growth occurs only if the spending cuts occur contemporaneously, which has decidedly not occurred, or if models with implausible features are employed.
Published: 10/18/04
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Economic Effects of Making the 2001 and 2003 Tax Cuts Permanent (Discussion Papers/Tax Policy Center)
Author(s):
William G. Gale , Peter Orszag
All of the provisions of the landmark tax cuts enacted in 2001 and 2003 are scheduled to expire by the end of 2010. This paper analyzes the economic effects of making the tax cuts permanent. We describe the recent tax cuts and the proposals to make them permanent, and explore the consequences of making the tax cuts permanent with regard to the fiscal status of the government, the distribution of after-tax income, and prospects for long-term economic growth.
Published: 10/15/04
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Bush Administration Tax Policy: Distributional Effects (Article/Tax Break)
Author(s):
William G. Gale , Peter Orszag
This paper evaluates the distributional effects of the 2001 and 2003 tax cuts, and is the second paper in a series on tax policy in the Bush Administration. We show that the tax cuts enacted to date increase the disparity in after-tax income; after-tax income rises by a larger percentage for high-income households than low-income households. Once the eventual financing of the tax cuts is taken into account, the distributional effects will likely be even more regressive. If the eventual policy adjustments needed to finance the tax cuts impose burdens that are proportional to income: about 80 percent of households, including a large majority of households in every income quintile, will end up worse off after the tax cuts plus financing than before; most families (i.e., with children) and most taxpayers with small business income will be worse off; and even if the tax cuts raise economic growth significantly, most households will end up worse off when the financing is included. We also address several criticisms of distributional analysis.
Published: 09/27/04
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Bush Administration Tax Policy: Introduction and Background (Article/Tax Break)
Author(s):
William G. Gale , Peter Orszag
This paper is the first of a series that summarizes and analyzes these policies and proposals. The series has two broad goals: to describe, interpret, and assess what has happened; and to examine the consequences of making the tax cuts permanent. This paper provides background information intended to help frame the issues analyzed in subsequent papers. Those papers will examine the distributional effects; tax cuts and fiscal policy; the effects on long-term growth; the effects as a short-term stimulus; the effects on government spending; and the extent to which the tax cuts serve as an effective prelude to fundamental tax reform.
Published: 09/13/04
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The 2001 and 2003 Tax Cuts: A Response to Jenn and Marron (Article/Tax Break)
Author(s):
Alan J. Auerbach , William G. Gale , Peter Orszag
In previous work, we have estimated the long-term revenue costs of the 2001 and 2003 tax cuts, assuming they are made permanent and are not gradually eroded by the Alternative Minimum Tax, to be about 2 percent of GDP, roughly the same size as the actuarial deficits over an equivalent time period in Social Security and Medicare Part A. Jenn and Marron (2004) criticize our calculation of the costs of both the tax cuts and the entitlement trust fund shortfalls. This paper responds to their criticisms and evaluates the alternative measures and concepts they propose using.
Published: 09/06/04
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Economic Effects of Making the 2001 and 2003 Tax Cuts Permanent (Research Report)
Author(s):
William G. Gale , Peter Orszag
All of the provisions of the landmark tax cuts enacted in 2001 and 2003 are scheduled to expire by the end of 2010. This paper analyzes the economic effects of making the tax cuts permanent. We describe the recent tax cuts and the proposals to make them permanent, and explore the consequences of making the tax cuts permanent with regard to the fiscal status of the government, the distribution of after-tax income, and prospects for long-term economic growth. [© Brookings Institution]
Published: 08/01/04
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