Tax Policy Center: Economic Stimulus

Activist Fiscal Policy to Stabilize Economic Activity

info@taxpolicycenter.org ( Alan J. Auerbach, William G. Gale) — Mon, 24 Aug 2009 00:00:00 EST

Facing the most severe recession since the 1930s, and probably the longest as well, the U.S. government has adopted an aggressive countercyclical fiscal policy stance, beginning with the Economic Stimulus Act of 2008 in February of that year, shortly after the recessions designated starting date, and followed one year later by the much larger American Recovery and Reinvestment Tax Act of 2009. These two bills, adopted under different presidents, both contained temporary tax rebates for households and temporary investment incentives for firms, indicating at least limited bipartisan acceptance of these approaches to countercyclical stimulus.

Here Comes the Next Fiscal Crisis

info@taxpolicycenter.org ( Alan J. Auerbach, William G. Gale) — Fri, 10 Jul 2009 00:00:00 EST

Los Angeles Times op-ed, July 8, 2009. In the immediate future, policymakers will face a delicate balancing act between encouraging economic recovery and establishing fiscal sustainability. Alan J. Auerbach and William G. Gale examine the economic challenges facing the U.S.

Give Up A Benefit, Gain Jobs

info@taxpolicycenter.org ( Leonard E. Burman) — Fri, 10 Jul 2009 00:00:00 EST

Washington Post op-ed, July 9, 2009. Employer-paid health insurance is entirely tax-free a break that will cost the Treasury about $250 billion this year. Len Burman looks at tax-free health insurance provided by employers.

Who Pays No Income Tax?

info@taxpolicycenter.org ( Roberton Williams) — Thu, 02 Jul 2009 00:00:00 EST

Nearly half of all tax units will pay no income tax in 2009. The fraction of non-taxpayers differs widely, depending on income, tax filing status, and whether the unit is elderly or contains children.

An Update on the Economic Crisis and the Fiscal Crisis: 2009 and Beyond

info@taxpolicycenter.org ( Alan J. Auerbach, William G. Gale) — Thu, 25 Jun 2009 00:00:00 EST

his paper reviews recent economic events and their impact on U.S. fiscal performance and prospects. We highlight the historic nature of the 2009 budget outcomes, the unsustainability of plausible ten-year budget projections, and the increasingly dire long-term fiscal problem. These conditions leave federal policy makers with difficult choices. Over the next several years, as the recession ends and the economy recovers, policy makers will face a delicate balancing act between encouraging economic recovery and establishing fiscal sustainability. Even if a successful recovery ensues, however, medium-term and long-term fiscal problems have become increasingly urgent.

The Economic Crisis and the Fiscal Crisis: 2009 and Beyond

info@taxpolicycenter.org ( Alan J. Auerbach, William G. Gale) — Thu, 19 Feb 2009 00:00:00 EST

In 2009, the federal deficit will be larger as a share of the economy than at any time since the 1940s. After 2009, we project an average deficit of $1 trillion per year for the next 10 years, under optimistic assumptions. The longer-run picture is even bleaker, with a fiscal gap of 7-9 percent of GDP -- between $1 trillion and $1.3 trillion annually in current dollars. Recent trends in credit default swap markets suggest that although fiscal policy problems are usually described as medium- and long-term issues, these problems may be upon us much sooner than previously expected.

Tax Stimulus Report Card: Conference Bill

Fri, 13 Feb 2009 00:00:00 EST

This report card evaluates the provisions of the Finance and Ways & Means Committees' conference tax stimulus bill (the "American Recovery and Reinvestment Tax Act of 2009"). The evaluation is preliminary and does not include all of the provisions in the bill most notably we omit provisions related to state and local debt and recovery zone credits. TPC will update the report card if significant changes occur before Congress passes the bill.

Tax Stimulus Report Card: Comparing the House and Senate Bills

Tue, 03 Feb 2009 00:00:00 EST

This report card compares the provisions of the House and Senate tax stimulus bills (the "American Recovery and Reinvestment Tax Plan of 2009"). The combined evaluation is preliminary and does not include all of the provisions in the bill - most notably we omit provisions related to state and local debt and recovery zone credits. TPC will update the report card as we learn more about specific provisions and as the stimulus bills move through Congress.

Tax Stimulus Report Card: Senate Finance Committee

Thu, 29 Jan 2009 00:00:00 EST

The Tax Policy Center has graded the key tax provisions of the pending Senate stimulus bill (the "American Recovery and Reinvestment Tax Plan of 2009"). Our grades, which rely on the bill's legislative language, focus on how well these measures would boost the economy in the short run. Accompanying write-ups describe current law, the proposed change, and the short- and long-term effects on the budget, the economy, fairness and tax complexity. We will update the report card as we learn more about the provisions and as the stimulus bill moves through Congress.

Tax Stimulus Report Card: House Bill

Mon, 26 Jan 2009 00:00:00 EST

The Tax Policy Center has graded the key tax provisions of the pending House stimulus bill (the "American Recovery and Reinvestment Tax Plan of 2009"). Our grades, which rely on the bill's legislative language, focus on how well these measures would boost the economy in the short run. Accompanying write-ups describe current law, the proposed change, and the short- and long-term effects on the budget, the economy, fairness and tax complexity. We will update the report card as we learn more about the provisions and as the stimulus bill moves through Congress.

President-Elect Obama's Tax and Stimulus Plans

info@taxpolicycenter.org ( Roberton Williams) — Thu, 08 Jan 2009 00:00:00 EST

During the presidential campaign, Barack Obama proposed a comprehensive tax plan that would raise taxes on high-income taxpayers, cut taxes for low- and middle-income households, and lose $2.9 trillion dollars of revenue over ten years. Obama will take office with the economy in sharp recession and a deteriorating fiscal situation, made worse by new spending on a bailout plan. Faced with those crises, Obama says he will pursue both his campaign tax plan and additional tax-related proposals addressing problems created by the downturn. This paper examines revenue and distributional effects of the tax plan and describes some stimulus proposals.

McCain's Gas-Tax Plan is On Empty

info@taxpolicycenter.org ( Leonard E. Burman) — Fri, 18 Apr 2008 00:00:00 EST

Presumptive Republican presidential nominee Sen. John McCain wants to suspend the federal gas tax for the summer travel season. Truckers say they like the idea. In this Marketplace commentary, Len Burman, Director of the Tax Policy Center explains why Senator McCains proposal wont get us where he wants to go. http://marketplace.publicradio.org/display/web/2008/04/17/burman_commentary/

Some Ignored Costs of Bonus Depreciation

info@taxpolicycenter.org ( C. Eugene Steuerle) — Mon, 03 Mar 2008 00:00:00 EST

As part of the recent stimulus bill, Congress and President Bush decided to try to grant businesses bonus depreciation allowances for new purchases of equipment. For each $100 spent in 2008 on equipment expected to last at least five years, businesses would be able to deduct the vast majority of costs in the first year $600, versus $240 under the old law. At a 35 percent corporate tax rate, for instance, corporations can get checks from the IRS for $210 instead of $84 in the first year for each $1,000 invested. There is one catch: They must have $210 of taxes already due to get $210 back, or $600 of profit against which to take a $600 deduction. Otherwise they will have to delay taking the deduction which is the world they were already in.

Make the Tax Cuts Work

info@taxpolicycenter.org ( Leonard E. Burman) — Wed, 23 Jan 2008 00:00:00 EST

New York Times, January 23, 2008 - Since 2001, official Washington's answer to every policy question has been the same. What should we do with a big surplus? Tax cuts. How do we beat back global terrorism? Tax cuts. Increase energy independence? Rebuild New Orleans? Expand health insurance coverage? Tax cuts, tax cuts, tax cuts. Now comes another question to which taxes have long been at least part of the answer. How do we stimulate the economy to prevent or shorten a recession?

Lower Taxes and Economic Growth: Response to a Flawed Analysis

info@taxpolicycenter.org ( Kim Rueben, Iris Lav) — Mon, 11 Jun 2007 00:00:00 EST

When the Speaker and other leaders of Florida's House of Representatives released their plan to roll back property taxes and place a tight growth limit on state and local revenues, they included a report in their release by the firm Arduin, Laffer and Moore that claims lower taxes will lead to higher economic growth. We examine and point out the flaws in this analysis and show the authors' fundamental result is due to how they constructed their data and an elementary statistical mistake.

Contrary to President's Claim, Large Majority of Americans Ultimately Are Likely to Lose From Tax Reconciliation Bill

info@taxpolicycenter.org ( Aviva Aron-Dine, Leonard E. Burman, Isaac Shapiro) — Mon, 05 Jun 2006 00:00:00 EST

In his recent statement responding to the tax reconciliation bill conference agreement, President Bush asserted that failure to extend the tax cuts contained in the bill would be "disastrous" for "all working Americans." In this analysis, we consider three possible approaches to paying for the tax cuts: one that approximates financing largely through cuts in federal programs, one that approximates financing through a combination of program cuts and progressive tax increases, and a third that approximates financing entirely through progressive tax increases. Under all three scenarios, the average household with income below $100,000 would lose from the tax bill.

Dynamic Scoring: Not so Fast!

info@taxpolicycenter.org ( Rudolph G. Penner) — Fri, 21 Apr 2006 00:00:00 EST

Using dynamic scoring to weigh the effects of tax and spending proposals poses a high risk that ideological biases will pollute the analysis, senior fellow Rudolph Penner warns in a Ripon Forum commentary. The former director of the Congressional Budget Office also points out that consistent dynamic scoring is logistically impossible given current technology.

Do Incentives Affect Behavior? Would an Economist Know?

info@taxpolicycenter.org ( C. Eugene Steuerle) — Mon, 03 Apr 2006 00:00:00 EST

In recent decades, economists have acquired great weight in debates over incentives. When it comes to examining the effect of policy incentives on behavior, the theory is relatively straightforward. However, many factors, especially non-financial, have been ignored for sometimes very legitimate reasons. Still, I have long believed that the failure to take into account other psychological and sociological motives for behavior, as well as the effect of complexity on the behavior that results, is a fundamental source of error in much of the economics literature. At the same time, I have come to believe in the great power of some incentives even if they cant be measured well. As for how much incentives change behavior, that is less clear to me.

Under the Sheltering Lie

info@taxpolicycenter.org ( Leonard E. Burman) — Tue, 20 Dec 2005 00:00:00 EST

[Marketplace] The White House says lowering taxes on capital gains and dividends will create jobs and opportunity. Tax analyst and commentator Len Burman thinks not.

Capital Gains Tax Rates, Stock Markets, and Growth

info@taxpolicycenter.org ( Troy Kravitz, Leonard E. Burman) — Mon, 07 Nov 2005 00:00:00 EST

Claims that increasing capital gains tax rates will adversely impact stock markets and economic growth are not strongly supported by empirical data. Over the last half-century, the correlation between the maximum capital gains tax rate and the ratio of the S&P index to GDP has been about -0.35. Also, capital gains rates display little evidence of correlation with economic growth.

Setting the Stage for Tax Reform--A Tax Policy Center Forum

info@taxpolicycenter.org ( The Tax Policy Center) — Tue, 18 Jan 2005 00:00:00 EST

This Urban-Brookings Tax Policy Center forum discussed issues that the new tax reform commission will have to grapple with in setting forth proposals to advance tax reform. Pamela Olson of Arps, Slate, Meagher & Flom, LLP and former Assistant Treasury Secretary for tax policy explained the goals of the tax system and presented some of the basic principles guiding tax reform, Gene Steuerle of the Urban Institute and the Tax Policy Center explained the need for reforming the tax policy process and William Gale of Brookings Institution and the Tax Policy Center discussed the question of whether to make tax cuts permanent or not.

Interview with Eugene Steuerle

info@taxpolicycenter.org ( Jasper L. Cummings, Alan J.J. Swirski) — Wed, 01 Dec 2004 00:00:00 EST

The main purpose of a tax system is to provide revenues to support government functions. It is not to cut taxes. At the same time one wants to create a tax system that supports efficient and fair government and to distort as little as possible the behavior of individuals who are subject to tax. The role of both tax cuts and tax increases is to move toward some optimal level of taxation needed for this time and place. People now use the tax system for a wide variety of reasonsreally too many. [ NewsQuarterly]

The American Jobs Creation Act of 2004 : Creating Jobs for Accountants and Lawyers

info@taxpolicycenter.org ( Kimberly A. Clausing) — Wed, 01 Dec 2004 00:00:00 EST

The American Jobs Creation Act of 2004 will repeal an export tax incentive (called ETI) that the World Trade Organization has ruled illegal. Yet the legislation also risks undermining the integrity of the U.S. tax system in important ways. While the bill is ostensibly aimed at promoting job creation and international competitiveness, the legislation is not an effective way to achieve these aims. As it stands, the main impact of the legislation will be to make the corporate income tax system more complex, less efficient, and less fair.

Bush Administration Tax Policy: Summary and Outlook

info@taxpolicycenter.org ( William G. Gale, Peter Orszag) — Mon, 29 Nov 2004 00:00:00 EST

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.

Bush Administration Tax Policy: Short-Term Stimulus

info@taxpolicycenter.org ( William G. Gale, Peter Orszag) — Mon, 01 Nov 2004 00:00:00 EST

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.

The Primary Deficit from 1962 to 2004

info@taxpolicycenter.org ( Elizabeth Bell, C. Eugene Steuerle) — Mon, 11 Oct 2004 00:00:00 EST

The primary surplus or deficit equals government receipts minus all outlays other than net interest. By excluding net interest, the primary surplus or deficit provides a more direct measure of overall government spending and taxing for a given fiscal year, as opposed to interest costs arising from past years. Historically, sharper drops in the primary surplus or deficit usually coincide with periods of recession, increased government spending, and the implementation of tax cuts. The strikingly rapid drop from a surplus of 4.8% of GDP in 2000 to a deficit of -2.0% in 2003 was the largest increase in the primary deficit outside World War II. Much like earlier drops, the 2000 to 2003 change corresponded with tax cuts and a relatively mild recession.

Bush Administration Tax Policy : Introduction and Background

info@taxpolicycenter.org ( William G. Gale, Peter Orszag) — Mon, 13 Sep 2004 00:00:00 EST

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.

Congress Morphs an 'Itty-Bitty' Tax Cut Into a Budget Buster

info@taxpolicycenter.org ( Leonard E. Burman, Peter Orszag) — Tue, 20 May 2003 00:00:00 EST

[Los Angeles Times] On May 15, the Senate passed a tax cut that would probably prove even more costly and less responsible than the Bush Administration. The president's dividend-relief proposal would cost almost $400 billion over the next 10 years. The Senate version could end up costing much more. Instead of ending the "double taxation" of corporate income, the Senate bill threatens to end all taxation of corporate income.

Thinking through the Tax Options

info@taxpolicycenter.org ( Leonard E. Burman, William G. Gale, Peter Orszag) — Mon, 19 May 2003 00:00:00 EST

This paper evaluates the tax proposals put forth by the Bush Administration, the House of Representatives, and the Senate Finance Committee, with respect to their impact on revenues, short-term stimulus, long-term growth and distribution of tax burdens and after-tax income. Particular attention is given to issues raised by accelerating the 2001 tax cuts, and the alternative dividend and capital gains tax cut proposals. We conclude with discussion of alternative policies that would be more efficient and equitable than those currently on the table.

Budget Blues: The Fiscal Outlook and Options for Reform

Fri, 09 May 2003 00:00:00 EST

Establishing a sustainable fiscal policy is central to the nation's long-term economic prospects, but requires a clear understanding of how past and current policies affect future resources. The federal budget should, but does not, provide this information, both because the task is difficult and current accounting practices are deficient. This paper shows that adjusting the official budget for many accounting and economic issues implies a bleak fiscal outlook that presents policymakers with difficult choices. We also explore options to restore fiscal sustainability directly and to improve the budget process that governs fiscal decisions.

The Economic Effects of Long-Term Fiscal Discipline

info@taxpolicycenter.org ( William G. Gale, Peter Orszag) — Thu, 24 Apr 2003 00:00:00 EST

This paper examines long-term fiscal discipline and economic performance, with two main results. First, declines in budget surpluses (increases in deficits) reduce national saving and therefore reduce future national income, regardless of their effect on interest rates. Second, increases in expected future deficits raise long-term interest rates. Thus, the costs of long-term deficits are significant and need to be compared carefully to the potential benefits of tax and spending changes that increase deficits.

This Is Not Your Daddy's Recession

info@taxpolicycenter.org ( C. Eugene Steuerle) — Mon, 10 Feb 2003 00:00:00 EST

It happens every time. An administration puts forward an economic package, and then suggests all the wonderful things it is going to do for the economy and for the public. Few costs. Few trade-offs. Win-win. Then opponents start picking apart the pieces. But then they play the same game. We can do the same or better but for less, they claim. Finally, the pundits line up on one side or the other, almost never admitting the logical inconsistencies of arguments on both sides.

14th Annual Roundtable on the President's Budget and the Economy

info@taxpolicycenter.org ( The Urban Institute) — Thu, 06 Feb 2003 00:00:00 EST

This first look at the president's proposed budget included discussion of the effects of the budget on the economy, proposed spending on defense and homeland security, the deficit outlook, and implications of tax cuts for low- and moderate-income families.

Fiscal Policy and Economic Growth : A Simple Framework

info@taxpolicycenter.org ( William G. Gale, Peter Orszag) — Mon, 03 Feb 2003 00:00:00 EST

The effect of fiscal policy on economic growth is a controversial and long-standing topic in economic theory, empirical research, and economic policymaking. It is at the heart of the policy debate surrounding the sharp increases in official federal budget surpluses in the 1990s, the equally sharp decline in the fiscal outlook since January 2001, and the increasingly imminent retirement of the baby boom generation. In this article, we provide a brief overview of the macroeconomic relations between budget surpluses and deficits, the tax and spending policies that influence those budget outcomes, and economic growth.

The President's Tax Proposal: Second Thoughts

info@taxpolicycenter.org ( William G. Gale, Peter Orszag) — Mon, 27 Jan 2003 00:00:00 EST

On January 7, 2003, President Bush proposed a new package of tax cuts, consisting primarily of a new tax cut for dividends and capital gains on corporate stock and an acceleration of most but not all of the provisions of the 2001 tax cut that were scheduled to take effect in future years.1 In the last two weeks, this column provided initial reactions to the package and a more focused examination of the proposal to cut taxes on dividends and capital gains. This week, we build on these findings and focus on four broad aspects of the plan: Budget effects, distributional effects, economic effects, corporate tax reform.

Do We Really Need More Stimulus?

info@taxpolicycenter.org ( C. Eugene Steuerle) — Mon, 27 Jan 2003 00:00:00 EST

Both the president and members of Congress have expressed strong political desire to appear to be "doing something" about the past recession and the current unemployment rate. This sentiment cuts across political parties and between the executive and congressional branches of government. In truth, however, few economists in the administration or in Congress, Republican or Democrat, have made much of a case that more stimulus - at least in terms of putting money in the economy - is needed or wanted at this time. Why? As far as I can tell, never before in the nation's history has so much fiscal stimulus been provided relative to the size of a downturn.

Taxing Capital Income Once

info@taxpolicycenter.org ( Leonard E. Burman) — Tue, 21 Jan 2003 00:00:00 EST

President Bush's recently proposed to eliminate the double taxation of corporate income. The proposal contains the germ of a good idea, but it is incomplete. Indeed, implementing it as is would be undesirable for several reasons: it would add to our burgeoning national debt and thus reduce economic growth; it would be highly regressive, and it would have little or no effect on the epidemic of corporate tax sheltersa growing phenomenon that is both inefficient and unfair. This paper proposes to address all of these deficiencies by coupling the Administration's proposal with full taxation of capital gains upon realization. The proposal would be revenue neutral, progressive, and would do more to improve the allocation of capital than the Administration's proposal.

Setting the Stage: The Coming Debate Over Tax and Fiscal Policy

info@taxpolicycenter.org ( The Tax Policy Center) — Thu, 09 Jan 2003 00:00:00 EST

A distinguished panel of tax and budget experts from the Tax Policy Center responded to the new tax and fiscal proposals of President Bush and Congressional leaders. Moderated by David Wessel, the panel - William Frenzel, Peter Orszag, Rudolph Penner, and Eugene Steuerle - offered timely analyses and perspectives on issues likely to be central to the ensuing debate over tax and fiscal policy. Topics included whether economic stimulus is currently needed; the effect of the Administration plan in the short and long terms; the distribution of the tax cut; the cut's impact on the deficit; and the complexities of the dividend tax exclusion.

The President's Tax Proposal: First Impressions

info@taxpolicycenter.org ( William G. Gale) — Wed, 08 Jan 2003 00:00:00 EST

[ Brookings Institution] President Bush's new tax plan is an answer in search of a question. It would provide little short-term stimulus. It seems unlikely to provide much of a long-term boost to growth or jobs. It is an incomplete way to reform corporate taxes. It would not boost investor confidence. It would provide windfall gains for previous actions, rather than encouraging new activity. It would make taxes more complex. It does not fix the alternative minimum tax. It does not resolve uncertainty regarding the repeal of EGTRRA at the end of 2010. It is fiscally irresponsible and unduly weighted toward high-income households.

Tax Provisions in The Democratic Stimulus Proposal

info@taxpolicycenter.org ( Jeff Rohaly, Leonard E. Burman) — Tue, 07 Jan 2003 00:00:00 EST

This paper outlines the provisions of the Democratic alternative to the President's stimulus plan. Their plan would provide a one-time rebate to working people similar to the program implemented in 2001, but available without regard to tax status. The tax provisions proposed by the Democrats would cost $90 billion in 2003 and $59 billion over ten years.

Tax Provisions in The President's Economic Stimulus Proposals

info@taxpolicycenter.org ( Leonard E. Burman, Jeff Rohaly) — Tue, 07 Jan 2003 00:00:00 EST

The President's stimulus plan would accelerate major elements of the income tax cuts enacted in 2001, provide additional temporary AMT relief, exempt dividends earned by individuals from income tax, and provide additional accelerated tax write-offs for small businesses. The tax provisions in the President's plan would cost $98 billion in 2003 and $670 billion over ten years. An additional $4 billion is earmarked for "personal reemployment accounts." This paper outlines the provisions of the President's plan and their distribution.

The Big Fix: Stimulate, but Watch the Red Ink

info@taxpolicycenter.org ( Rudolph G. Penner) — Sun, 29 Dec 2002 00:00:00 EST

[L.A. Times] Four Economic Views, but there's one point on which analysts agree: The U.S. economy is shaky. But beyond that basic truth, there is little consensus. Why things soured, how to get back on track, even how.

Some Future Directions for Public Finance : Presidential Address to the National Tax Association

info@taxpolicycenter.org ( C. Eugene Steuerle) — Thu, 14 Nov 2002 00:00:00 EST

This was the presidential address given at the National Tax Association meeting on November 14, 2002, exploring the long term developments in public finance. In particular, it focuses on four areas: First, both external events and the advancement of knowledge have brought public finance analysis to a stage where taxes can no longer be compartmentalized so easily from spending. Second, many problems of public finance are at their core problems of economic accounting, and the two disciplines of economics and accounting need to be brought into better alignment. Third, the notion of federalism must be expanded to encompass better the activities of nonprofit organizations, the press, and other sources of independent power that complement public functions and provide for further checks and balances. Finally, never before in history have government budgets promised so much for the future, thereby creating a desperate need both for analysis that can reveal the decline in flexibility and for rules that can restore it.

About Half of Dividend Payments Do Not Face Double Taxation

info@taxpolicycenter.org ( William G. Gale) — Mon, 11 Nov 2002 00:00:00 EST

The United States is often said to maintain a classical tax system, under which corporate profits are subject to double taxation, once at the corporate level when they are earned, and again at the individual level when they are paid out as dividends. The Bush administration is reportedly considering corporate tax reform options in part because of concerns about double taxation. Dividends are not taxed twice if they are paid to nonprofit institutions or foundations; federal, state or local governments; public or private pension funds; and 401(k) plans or Individual Retirement Accounts.

Dynamic Scoring and Budget Estimations

info@taxpolicycenter.org ( Deborah Kobes, Jeff Rohaly) — Tue, 11 Jun 2002 00:00:00 EST

Dynamic scoring is meant to provide a more complete picture of the budget effects of tax and spending proposals by incorporating the macroeconomic effects of the legislation. Official estimates already account for the microeconomic effects on individual behavior. Incorporating macroeconomic feedback effects to reflect how policies might affect economic growth would be, in theory, desirable. In practice, however, dynamic scoring would not improve the reliability of budget estimates. Because the process would necessarily require many subjective decisions, it would also risk opening up the scoring agencies to criticism of bias.

The 2001 Tax Cut: One Year Later

info@taxpolicycenter.org ( The Urban Institute) — Tue, 04 Jun 2002 00:00:00 EST

[First Tuesdays Transcript] Moderated by Jodie Allen of U.S. News & World Report, this Urban Institute First Tuesdays Forum takes a look at the 2001 Tax Cut also know as the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) one year after it's inception. The panel was made up of the co-directors of the Urban Institute and Brookings Institution's joint Tax Policy Center, Len Burman and Bill Gale. Joining them on the panel were Eric Engen of AEI and former Congressman William Frenzel.

Can Policymakers Time the Ending of Macroeconomic Incentives? : Part Three: New Versus Old Business and Complexity

info@taxpolicycenter.org ( C. Eugene Steuerle) — Mon, 29 Apr 2002 00:00:00 EST

When policy makers decide that they are going to grant a temporary write-off for new capital investments, they essentially conclude that its macroeconomic advantages exceed other alternatives. However, incentive effects apply more powerfully to established or old business than to new business -- a potential threat to innovation. New temporary allowances also set in motion additional accounting requirements that both increase complexity and encourage firms to play games with the timing of billing or delivery of assets.

Can Policymakers Time the Ending of Macroeconomic Incentives? : Part Two: What Happens When Temporary Investment Incentives End?

info@taxpolicycenter.org ( C. Eugene Steuerle) — Mon, 15 Apr 2002 00:00:00 EST

This brief considers focuses on the ending of temporary investment incentives.

Can Policymakers Time the Ending of Macroeconomic Incentives?

info@taxpolicycenter.org ( C. Eugene Steuerle) — Fri, 29 Mar 2002 00:00:00 EST

Should policymakers use capital expense deductions to help stabilize the economy?

The Answer Isn't Capital Gains : Commentary

info@taxpolicycenter.org ( Leonard E. Burman) — Sun, 30 Sep 2001 00:00:00 EST

(Houston Chronicle) Even before the ruins of the World Trade Towers stop smoldering, Congressional leaders are quietly planning to revive their favorite scheme to boost the economya $20 billion plus cut in capital gains taxes, possibly as an add-on to minimum wage legislation. Proponents, led by Senate Minority Leader Trent Lott, claim that a temporary cut in the already low tax rate on profits would both raise revenues and stimulate spending and investment. That's nonsense. While a capital gains tax cut would surely boost the bank accounts of the wealthy, it would not revive our flagging economy and might further destabilize the skittering stock market.

On the Institutions of Taxation, Accounting, and the Law

info@taxpolicycenter.org ( C. Eugene Steuerle) — Mon, 09 Oct 2000 00:00:00 EST

In this essay, Senior Fellow Eugene Steuerle argues that it is in developing--or failing to develop--tax, accounting, and legal institutions that a significant part of the economic and democratic fate of Russia, China, and much of the rest of the second and third world rests. The corollary is that a well-developed democracy tempts its own fate when it takes those institutions totally for granted and fails occasionally to renew and revitalize them.

Tax Cutting: Why the Limited Enthusiasm?

info@taxpolicycenter.org ( C. Eugene Steuerle) — Mon, 29 May 2000 00:00:00 EST

Senior Fellow Eugene Steuerle examines the prospects for a tax cut, and concludes that under the economic conditions at the time, a tax cut would sell mainly if it were believed to be the best use of the money, but overwhelming momentum behind it - or behind any other budgetary change for that matter - was unlikely.

When is a Tax Cut Justified?

info@taxpolicycenter.org ( C. Eugene Steuerle) — Mon, 05 Apr 1999 00:00:00 EST

Senior Fellow Eugene Steuerle attempt to make sense of the tax cut debate, offering guidance in answering the question, "when is a tax cut warranted?"

Pulling Off the Budget Deal: A Long Way To Go

info@taxpolicycenter.org ( C. Eugene Steuerle) — Mon, 19 May 1997 00:00:00 EST

Senior Fellow Eugene Steuerle explains how the budget deal that will likely be reached will remain short of its goals, due to numerous technical difficulties in reaching numerical targets in the deal.

The Multiple Goals Of Tax Reformers

info@taxpolicycenter.org ( C. Eugene Steuerle) — Wed, 11 Oct 1995 00:00:00 EST

Senior Fellow Eugene Steuerle examines the goals of tax reformers.