Tax Policy Center: Urban-Brookings Tax Policy Center

Measuring Effective Tax Rates

Wed, 08 Feb 2012 00:00:00 EST

Effective tax rates (ETRs) measure how much people pay in taxes as a percentage of their pretax incomes. That seems simple, but theres an important complication: there are different ways to measure how much someone pays in taxes and how much he collects in pretax income. Those choices matter a great deal. As a result, it is essential to use the same ETR measure when comparing tax burdens across individual taxpayers or groups.

Distributional Effects of Individual Income Tax Expenditures: An Update

info@taxpolicycenter.org ( Daniel Baneman, Eric Toder) — Fri, 03 Feb 2012 00:00:00 EST

Tax expenditures on average raise after-tax incomes more for upper-income than for lower-income taxpayers. As a share of income, special rates for capital gains and dividends and itemized deductions provide the largest benefits for taxpayers in the top 1 percent of the income distribution, exemptions and exclusions benefit taxpayers in upper middle-income groups the most, and refundable credits provide the largest benefits to those in the bottom two quintiles of the distribution. Interactions among provisions make the revenue cost of all tax expenditures about 10 percent larger than the sum of the costs of the separate provisions.

Curbing Tax Expenditures

Tue, 31 Jan 2012 00:00:00 EST

This paper takes a broad look at tax expenditures in the context of revenue raising tax reform. It first reviews how tax expenditures have changed over the past 25 years and provides estimates of the distribution of tax savings resulting from tax expenditures today. The paper then examines three approaches for applying across-the-board limits to a selected group of the largest and most widely utilized tax preferences. The three optionsa fixed percentage credit, a cap based on income, and a constant percentage reductioncan all be designed to raise significant revenue for deficit reduction in a progressive manner.

Health Reform's Tax on Investment: Facts and Myths

info@taxpolicycenter.org ( Donald Marron) — Tue, 31 Jan 2012 00:00:00 EST

To help pay for expanded health insurance coverage, the health reform legislation enacted in 2010 included a new 3.8 percent tax on the net investment income of high-income taxpayers. When it goes into effect in 2013, it will increase the top tax rate on capital gains, dividends, and other investment income, regardless of whether the 2001 and 2003 tax cuts are allowed to expire. Almost all the burden will be borne by taxpayers with extremely high incomes. More than half the burden, for example, falls on taxpayers in the top 0.1 percent of the income distribution.

Using a VAT to Reform the Income Tax

info@taxpolicycenter.org ( Eric Toder, Jim Nunns, Joseph Rosenberg) — Fri, 27 Jan 2012 00:00:00 EST

In 100 Million Unnecessary Returns, Columbia University law professor Michael J. Graetz proposed a sweeping reform of the federal tax system that is intended to simplify the tax system, improve economic incentives, and maintain fairness. The Graetz proposal would remove most current taxpayers from the income tax rolls, reform the corporate income tax, significantly reduce the top individual and corporate rates, and adopt a value-added tax (VAT). This paper describes the Graetz proposal in detail and analyzes its effects on federal revenues, spending and the deficit, the distribution of tax burdens, economic incentives, and tax administrative and compliance costs.

America Owes $10 Trillion! No, $50 Trillion! Let Me Explain.

info@taxpolicycenter.org ( Donald Marron) — Fri, 27 Jan 2012 00:00:00 EST

In a contribution to the Christian Science Monitor, Donald Marron discusses the estimates of America's debt which vary by tens of trillions of dollars, depending on how you count. The bottom line: It's deep but not yet fatal.

Tax Rates on Capital Gains

info@taxpolicycenter.org ( Roberton Williams) — Wed, 25 Jan 2012 00:00:00 EST

Tax rates on capital gains have fluctuated over the past century, sometimes matching the rates for ordinary income but more often substantially below them. The current top gains tax rate is 15 percent, less than half the 35 percent top rate on ordinary income and lower than at any time since the depression. But if Congress does not change the law, the expiration of the Bush-era tax cuts and imposition of taxes associated with the 2010 healthcare legislation will boost the maximum tax rate on gains to 25 percent in 2013.

Controlling the Deficit: The Debate Continues

info@taxpolicycenter.org ( John L. Palmer, Rudolph G. Penner) — Fri, 20 Jan 2012 00:00:00 EST

The report discusses the important budget events of 2011. It begins with the House Republican budget and the president's response. The very different approaches to health and discretionary spending and tax policy are analyzed in detail. The policy debate continued into the confused debt limit negotiations of July. The Budget Control Act finally emerged. It capped discretionary spending and created a "super committee" that was to propose additional deficit reductions. The committee failed miserably. An automatic across-the-board spending cut is supposed to result from that failure. The report describes its effects on defense and nondefense spending.

Funding and Investing in Infrastructure

info@taxpolicycenter.org ( Michael A. Pagano) — Wed, 18 Jan 2012 00:00:00 EST

Funding and investing in infrastructure are not only about finding adequate resources to meet the demands of citizenry, but rather requires understanding of how infrastructure fits into the broader functions of government. This brief examines the key role of pricing infrastructure projects and how the total cost of a project (including lifetime maintenance costs) should be included in funding decisions. Current federal and state policies often encourage new building rather than maintenance and care of existing infrastructure. The role of public-private partnerships in infrastructure projects is also sometimes more about political rather than economic considerations. The author presents options to better coordinate infrastructure financing and payments across levels of government.

International Competitiveness : Who Competes against Whom and for What?

info@taxpolicycenter.org ( Eric Toder) — Tue, 10 Jan 2012 00:00:00 EST

Political leaders and commentators frequently claim that the policies they favor will make the United States more competitive, without defining what competiveness between countries means. This paper defines competitiveness as a contest between nations for scarce and mobile resources and explores how different tax policies may help or hinder efforts to attract high-skilled labor, capital investment, and headquarters of multinational corporations. While these inputs contribute to living standards, elevating competition for them into a final goal of policy instead of a consideration that must be weighed against costs of tax policies that attract them could lead to seriously flawed policies.

Twelve Days of Christmas Hopes for Tough Economy, Deadlocked Congress

info@taxpolicycenter.org ( Donald Marron) — Thu, 22 Dec 2011 00:00:00 EST

In a contribution to the Christian Science Monitor, Donald Marron discusses hopes for the global economy and the political leaders struggling to keep it on an even keel.

Sarah Rosen Wartell, Think Tank Executive and Housing Finance Expert, to be the Urban Institute's Third President

info@taxpolicycenter.org ( Urban Institute) — Tue, 20 Dec 2011 00:00:00 EST

Sarah Rosen Wartell, a public policy executive and housing markets expert who co-founded the Center for American Progress (CAP) and serves as its executive vice president, will become the third president of the Urban Institute at the end of February.

Teddy Roosevelt Redux?

info@taxpolicycenter.org ( C. Eugene Steuerle) — Wed, 14 Dec 2011 00:00:00 EST

The debate over the relationship between government and the rich has been part of every presidential contest for more than a century. But myths and misunderstandings pervade attempts to compare 2012 and 1910 with policy prescriptions in mind. Chief among the myths propagated by both political parties is that, for better or worse, larger and more engaged government has come about through taxing the rich.

Composition of Tax-Deductible Charitable Contributions

info@taxpolicycenter.org ( Joseph Rosenberg) — Tue, 13 Dec 2011 00:00:00 EST

Taxpayers who elect to itemize can claim a deduction against federal income tax liability for contributions made to registered charitable organizations. While cash gifts still account for the vast majority of charitable donations reported on tax returns, gifts of noncash property have grown as a share of total contributions. Gifts of corporate stock, mutual funds, and other investments account for the largest share of noncash donations and are almost exclusively reported by high-income taxpayers.

The Property Tax Exemption for Nonprofits and Revenue Implications for Cities

info@taxpolicycenter.org ( Daphne A. Kenyon, Adam H. Langley) — Fri, 09 Dec 2011 00:00:00 EST

The charitable property tax exemption can have significant revenue implications for municipalities with large nonprofit sectors and heavy reliance on the property tax. Interest in policies to offset these revenue implications has grown because of the growth of the nonprofit sector in recent decades and the fiscal crisis currently facing many local governments. This policy brief discusses some of these policies, including nonprofit payments in lieu of taxes (PILOTs), municipal service fees, heavier reliance on user fees and special assessments, in-kind contributions from nonprofits, state aid to municipalities hosting tax-exempt nonprofits, and local control over the charitable property tax exemption.

Do Low-Income Workers Benefit from 401(k) Plans? (Full Report)

info@taxpolicycenter.org ( Eric Toder, Karen E. Smith) — Fri, 09 Dec 2011 00:00:00 EST

Economists frequently assume that employees pay for employer-provided fringe benefits, such as contributions to retirement plans, in the form of reduced wages. This paper challenges these assumptions. Because low-income employees receive little tax benefit from saving in qualified retirement plans, they may not be willing to accept a one dollar reduction in their wage in return for an additional dollar contributed to their 401(k) plan. We find that employers reduce wages of high-income workers by 90 to 99 cents for every dollar contributed to a 401(k) plan, but they reduce wages of low-income workers by only 11 to 29 cents.

Do Low-Income Workers Benefit from 401(k) Plans? (Brief)

info@taxpolicycenter.org ( Eric Toder, Karen E. Smith) — Fri, 09 Dec 2011 00:00:00 EST

Real Tax Reform: Flat-Tax Simplicity with a Progressive Twist

info@taxpolicycenter.org ( Donald Marron) — Fri, 25 Nov 2011 00:00:00 EST

In a contribution to the Christian Science Monitor, Donald Marron agrees that there are good reasons for a simpler tax system, as found in the flat-tax plans of GOP hopefuls Perry, Gingrich, and Cain. But they need to be made more progressive to amount to real tax reform that can pass muster politically.

Using a VAT for Deficit Reduction

info@taxpolicycenter.org ( Jim Nunns, Joseph Rosenberg, Eric Toder) — Tue, 22 Nov 2011 00:00:00 EST

Two ways of reducing the deficit are imposing a broad VAT with a rebate to offset the burden on low-income households and increasing marginal income tax rates. The prototype VAT would impose a larger burden on low- and middle-income households than raising income tax rates and increase compliance costs for taxpayers and administrative costs for the government, especially during a startup period. But the VAT would lead to a smaller increase in marginal tax rates on labor income than an income tax, not affect incentives to save and invest, and impose fewer, but not necessarily smaller, distortions on economic decisions.

Congress Begs a Crisis to Fix the Debt

info@taxpolicycenter.org ( Rudolph G. Penner) — Mon, 21 Nov 2011 00:00:00 EST

In a contribution to the CNNMoney.com, Rudolph Penner discusses the super committee's failure to fix the deficit.

Tax Reform: Lessons From History

info@taxpolicycenter.org ( C. Eugene Steuerle) — Thu, 20 Oct 2011 00:00:00 EST

This article was published as part of the Tax Note series "The Legacy of the TRA '86." As current budget pressure forces us to consider tax reform as a means of raising revenue, past reforms provide us some valuable lessons. Reforms typically begin with a consensus that something is broken and that while we disagree on the perfect solution, no one favors the unequal justice, inefficiency, or complexity in our tax code. It was that type of bipartisan agreement that led to past successful tax reforms, such as in 1986, 1969, and 1954. Similar ideas are relevant today.

Reprinted with permission from Tax Analysts

The Tax Treatment of Charities & Major Budget Reform : Testimony Before the Committee on Finance United States Senate

info@taxpolicycenter.org ( C. Eugene Steuerle) — Tue, 18 Oct 2011 00:00:00 EST

Eugene Steuerle testifies before the Senate Finance Committee on "Tax Reform Options: Incentives for Charitable Giving," presenting options on how to increase tax revenues with minimal impact or perhaps even an increase in charitable giving. Among other recommendations, he suggests a floor under charitable giving, improved compliance measures, greater restrictions on non-cash gifts, a better system of information reporting, allowing taxpayers to immediately deduct contributions they make while filing their tax returns, extending the deduction to taxpayers who don't itemize, raising the ceiling on allowed charitable giving for some types of gifts, and reforming the foundation excise tax.

Income Tax Paid at Each Tax Rate, 1958-2009

info@taxpolicycenter.org ( Daniel Baneman, Jim Nunns) — Wed, 12 Oct 2011 00:00:00 EST

The federal individual income tax has had many more brackets and much higher rates in the past than it does today. In 1958, for example, there were 24 brackets (versus 6 today) and the top rate was 91 percent (versus 35 percent today). The impact of more brackets and higher rates on taxpayers and revenues depends on how much taxable income falls in each of the tax rate brackets. We find that only a small fraction of returns was subject to rates above todays top rate of 35 percent in any year since 1958, but a significant fraction of tax was paid at these higher rates in many years. For example, prior to 1982 (when the top rate was reduced to 50 percent), taxable income in brackets above todays top 35 percent rate was taxed at an average effective rate of 49 percent. We estimate that increasing the effective tax rate on taxable income in the 35 percent bracket to 49 percent would have raised $78 billion of additional income tax revenue in 2007.

California's Initiative Turns 100: What's the Single Best Thing We Can Do to Improve the Initiative Process? Make it harder.

info@taxpolicycenter.org ( Kim Rueben) — Wed, 12 Oct 2011 00:00:00 EST

This year marks the 100th Anniversary of California's initiative process. In 1911, California famously adopted the direct initiative process and ballot box decision-making has become almost as synonymous with the Golden State as beaches, hi-tech innovation, and Hollywood. While 75% of voters in California still see direct initiatives as a good thing, a similar percentage thinks it could use some tweaking. In honor of the anniversary, Zcalo Public Square garnered commentary on the initiative process.

Simple Tweak, Profound Effects

info@taxpolicycenter.org ( Roberton Williams) — Fri, 30 Sep 2011 00:00:00 EST

In a contribution to the New York Times' Room for Debate, Roberton Williams suggests Congress scale back on tax subsidies in a way that protects America's hard-hit middle class.

Energy Policy and Tax Reform

info@taxpolicycenter.org ( Donald Marron) — Thu, 22 Sep 2011 00:00:00 EST

Donald Marron's testimony before the House Subcommittee on Select Revenue Measures and the Subcommittee on Oversight of the Committee on Ways and Means on energy policy and tax reform.

Five Tough Deadlines for Decisions on Spending, Government Debt

info@taxpolicycenter.org ( Donald Marron) — Thu, 22 Sep 2011 00:00:00 EST

In a contribution to the Christian Science Monitor, Donald Marron discusses the five deadlines that will force Congress to address spending and government debt.

Changing the Budget Process

info@taxpolicycenter.org ( Rudolph G. Penner) — Wed, 21 Sep 2011 00:00:00 EST

Rudolph Penner's testimony before the House Committee on the Budget on proposals for changing the budget process.

Trends in Tax Expenditures, 1985-2016

info@taxpolicycenter.org ( Allison Rogers , Eric Toder) — Fri, 16 Sep 2011 00:00:00 EST

The landmark Tax Reform Act of 1986 greatly changed the cost of tax expenditures. The revenue lost to tax expenditures declined sharply after enactment of the 1986 Act, falling from nearly 9 percent of total GDP in fiscal year 1985 to 6 percent in 1988. Since then, tax expenditures have gradually increased as a share of GDP but have remained below the 1985 level. Furthermore, the composition of tax expenditures has changed significantly.

Poverty and Income Tax Entry Threshold

info@taxpolicycenter.org ( Elaine Maag) — Wed, 07 Sep 2011 00:00:00 EST

The tax entry threshold is the income level at which a person begins paying federal income taxes. Unlike payroll taxes, income taxes do not start at the first dollar of earnings. Rather, the federal income tax system exempts an amount of income from taxation based on the type of tax unit (married or unmarried, with or without children) and the number of people in the tax unit. Tax credits can raise the tax entry threshold further. This article compares the tax entry threshold to the poverty line providing one way to judge how the tax system treats low-income families and providing a comparison of the relative generosity of the income tax for families with and without children.

Budget Hawks, Doves Deadlocked? Send in the Foxes!

info@taxpolicycenter.org ( Donald Marron) — Wed, 17 Aug 2011 00:00:00 EST

In a contribution to the Christian Science Monitor, Donald Marron argues for a new way of approaching the U.S.'s budget woes.

Options to Reform the Deduction for Home Mortgage Interest

Tue, 16 Aug 2011 00:00:00 EST

Currently, taxpayers can deduct interest on up to $1 million in acquisition debt used to buy, build, or improve their primary residence or a second designated residence. In addition, taxpayers can deduct interest on up to $100,000 in home equity loans or other loans secured by their properties regardless of the loans purpose. We consider a proposal that would limit the amount of deductible interest to the amount incurred on the first $500,000 of debt on a primary residence only, and would replace the itemized deduction with a nonrefundable tax credit equal to 15 percent of eligible home mortgage interest.

Options to Limit the Benefit of Tax Expenditures for High-Income Households

Tue, 02 Aug 2011 00:00:00 EST

This analysis measures the revenue and distributional impacts of three proposals to limit tax expenditures for higher-income households: the Obama Administration's plan to cap the value of itemized deductions at 28 percent; an effective minimum tax (EMT) to ensure that tax liability is at least a certain percentage of a taxpayer's income; and a modified version of a recent proposal to limit the value of specific tax expenditures to two percent of adjusted gross income (AGI).

Why Some Tax Units Pay No Income Tax

Wed, 27 Jul 2011 00:00:00 EST

About 46 percent of American households will pay no federal individual income tax in 2011, roughly half of them because of structural features of the income tax that provide basic exemptions for subsistence level income and for dependents. The other half are nontaxable because tax expenditures special provisions in the tax code that benefit selected taxpayers or activitieswipe out tax liabilities and, in the case of refundable credits, yield net payments from the government. Provisions that benefit senior citizens and low-income working families with children particularly affect households with income under $50,000 but other factors make higher-income households nontaxable.

America Doesn't Need A Debt Limit

info@taxpolicycenter.org ( Donald Marron) — Mon, 18 Jul 2011 00:00:00 EST

In a contribution to the Christian Science Monitor, Donald Marron argues for eliminating the U.S.'s debt limit.

Which Industries Pay Corporate Income Taxes?

info@taxpolicycenter.org ( Eric Toder) — Mon, 11 Jul 2011 00:00:00 EST

Over the past decade, three-fourths of corporate income tax liability was incurred by firms in four sectors: manufacturing, finance and insurance, wholesale and retail trade, and management of companies (holding companies). Manufacturing firms paid a significantly higher share of taxes than their share of net worth, but about the same as their share of receipts. Finance and insurance companies paid very little tax in relation to their net worth, but a larger share of taxes than their share of receipts. Retailers paid high taxes relative to their net worth, but low taxes in relation to receipts.

Restoring Solvency and Improving Equity in Social Security Benefit Options : Statement Before the U.S. House Ways and Means Subcommittee on Social Security

info@taxpolicycenter.org ( C. Eugene Steuerle) — Fri, 08 Jul 2011 00:00:00 EST

Gene Steuerle testifies on alternative ways to restore solvency and undertake benefit reforms in Social Security, concentrating on four: restricting automatic growth in benefits where needs are least, adjusting benefits so they both encourage employment and are concentrated more in older ages, removing many sources of inequity and inefficiency that penalize beneficiaries, and reforming private pensions so they better protect the majority of workers who today end up with little in the way of private retirement benefits.

Spending in Disguise

info@taxpolicycenter.org ( Donald Marron) — Tue, 28 Jun 2011 00:00:00 EST

A great deal of government spending is hidden in the federal tax code in the form of deductions, credits, and other preferences preferences that seem like they let taxpayers keep their own money, but are actually spending in disguise.

Social Security and Medicare Taxes and Benefits Over a Lifetime

info@taxpolicycenter.org ( C. Eugene Steuerle, Stephanie Rennane) — Tue, 28 Jun 2011 00:00:00 EST

How much will you pay in Social Security and Medicare taxes over your lifetime? And how much can you expect to get back in benefits? It depends on whether you're married, when you retire, and how much youve earned over a lifetime. These tables provide estimates of the lifetime value of Social Security and Medicare benefits and taxes for typical workers in different generations at various earning levels.

America Is Playing With Fire With Its Default Talk

info@taxpolicycenter.org ( Donald Marron) — Mon, 27 Jun 2011 00:00:00 EST

In a contribution to the Christian Science Monitor, Donald Marron argues that the ongoing public discussion of a default poses a major threat to U.S. financial markets.

The Top Total Income Tax Rate on Corporate Profits, 1913-2011

info@taxpolicycenter.org ( Jim Nunns) — Tue, 07 Jun 2011 00:00:00 EST

Corporate profits are taxed under both the corporate and individual income taxes. The total income tax rate on corporate profits therefore depends on the corporate rate and the individual rates on dividends and capital gains, as well as on the share of after-tax profits corporations pay as dividends, the share of stock held in retirement and other nontaxable accounts, and the timing of capital gains realizations. To illustrate how these factors determine the total income tax rate on corporate profits, I made assumptions about corporate distributions, stock holdings in tax-favored accounts and patterns of capital gains realizations, and applied those factors to the top corporate and individual rates on dividends and capital gains over the 1913-2011 period (see graph)

Cut the deficit? Go after tax breaks. Yeah, tax breaks.

info@taxpolicycenter.org ( Donald Marron) — Tue, 24 May 2011 00:00:00 EST

In a contribution to the Christian Science Monitor, Donald Marron discusses the hundreds of billions of dollars in spending plans that masquerade as tax breaks, and why these provisions need greater scrutiny.

Who Benefits from Tax Expenditures?

info@taxpolicycenter.org ( Roberton Williams) — Wed, 04 May 2011 00:00:00 EST

The federal income tax is replete with tax expenditures, provisions that grant special benefits to selected taxpayers or for selected activities. Exclusions and deductions reduce taxable income, preferential rates cut the tax on specific types of income, and tax credits are subtracted directly from tax liability.

A Reference Manual for Child Tax Benefits

info@taxpolicycenter.org ( Elaine Maag, Stephanie Rennane, C. Eugene Steuerle) — Wed, 27 Apr 2011 00:00:00 EST

The individual income tax contains multiple provisions that favor families with children. They range from credits targeted towards low-income families to deductions that favor higher income families. Some provisions benefit a family by virtue of the family having children, others try to incentivize behavior such as work and going to school. This paper describes the various child-related provisions and shows the distribution of who benefits from the provisions. Benefits can be substantial. For example, a single parent with two children could receive a tax subsidy worth almost $9,000. The rules governing the provisions are complex and ripe for reform.

Capital Income Taxation and Progressivity in a Global Economy

info@taxpolicycenter.org ( Rosanne Altshuler, Benjamin H. Harris, Eric Toder) — Tue, 26 Apr 2011 00:00:00 EST

The increase in international capital mobility over the past two decades has put pressure on the tax treatment of corporate equity income.Corporate-level taxes distort investment flows across locations and create opportunities for tax avoidance by shifting income across jurisdictions. This paper explains why there may be both efficiency gains and increases in progressivity from shifting taxes on corporate equity income from the corporate to the shareholder level.We estimate that taxing capital gains and dividends as ordinary income could finance a substantial cut in the corporate tax rate and make the tax system more progressive.

Libya Turmoil Highlights US Military Spending. Next Step: Cuts.

info@taxpolicycenter.org ( Donald Marron) — Mon, 18 Apr 2011 00:00:00 EST

In a contribution to the Christian Science Monitor, Donald Marron discusses America's renewed concern about defense spending in light of US military action in Libya.

Any Difference Between Tax Breaks and Spending Programs?

info@taxpolicycenter.org ( Donald Marron) — Fri, 15 Apr 2011 00:00:00 EST

In a contribution to the Christian Science Monitor, Donald Marron discusses the recent Supreme Court ruling that state tax breaks are different from spending programs, but the effect of each is the same

Methodology for Distributing a VAT

info@taxpolicycenter.org ( Eric Toder, Jim Nunns, Joseph Rosenberg) — Tue, 12 Apr 2011 00:00:00 EST

The Tax Policy center has developed a new method for estimating the distributional effects among income groups of a broad-based consumption tax, such as a value-added tax (VAT). The new method provides separate measures of the long-run and transitional effects of introducing a VAT. In the long-run, taxpayers bear the VAT burden in proportion to the sum of their labor compensation, transfer payments, and super-normal returns to capital, but normal investment returns would be exempt. In the transition, an additional burden would be imposed on the spend-down of existing wealth, but indexed transfer payments would be exempt.

Tax Simplification: Clarifying Work, Child, and Education Incentives

info@taxpolicycenter.org ( Elaine Maag) — Wed, 30 Mar 2011 00:00:00 EST

The federal income tax code is riddled with complex provisions concerning children. Families with children qualify for and receive substantial assistance, but the provisions are difficult for parents to understand and for the IRS to administer. This article proposes making uniform the definition of child under age 19, regardless of student status for the key child benefits: the earned income tax credit, the dependent exemption, head of household filing status, and the child tax credit. Savings from the proposal could be used to subsidize higher education, particularly for low-income families that would lose assistance from the EITC. The proposal would simplify the tax system, clarify incentives, and set the stage for broader reform.

How Large Are Tax Expenditures?

info@taxpolicycenter.org ( Donald Marron) — Wed, 30 Mar 2011 00:00:00 EST

Tax expenditures are getting increased scrutiny from budget hawks and tax reformers. New Treasury estimates, released as part of President Obamas recent budget, indicate that these tax preferences will reduce individual and corporate income tax revenues by almost $1.1 trillion in 2011. Those provisions will also increase spending on refundable tax credits by $108 billion and will reduce payroll and excise tax receipts by $111 billion. Together, the tax expenditures identified by Treasury will total almost $1.3 trillion this year.

Responses to Tax Incentives in a Complex and Uncertain Tax Law : Before the Senate Committee on Finance

info@taxpolicycenter.org ( Eric Toder) — Wed, 30 Mar 2011 00:00:00 EST

Eric Toder's testimony before the before the Senate Finance Committee on how tax law complexity limits the effectiveness of tax incentives.

Tax Proposals in the 2012 Budget

Mon, 28 Mar 2011 00:00:00 EST

President Obama's 2012 Budget contains a number of tax provisions that would cut taxes for low- and middle-income households and raise taxes on wealthier taxpayers. This resource guide describes the tax proposals, offers more detailed commentary on key provisions, and links to tables showing the distributional effects of the overall proposal and various elements of the plan.

The Pointless Debate Over the Social Security Trust Fund

info@taxpolicycenter.org ( C. Eugene Steuerle) — Thu, 24 Mar 2011 00:00:00 EST

What does matter is that Social Security expenses are expected to rise by about 50 percentfrom about 4.3 to 6.3 percentage points of GDPfrom 2008 to 2030, and taxes aren't. As the baby boomers retire, higher expenses and less tax revenue mean that the national deficit will rise year after year.

Conversations: Eric Toder

info@taxpolicycenter.org ( Meg Shreve) — Tue, 22 Mar 2011 00:00:00 EST

Eric Toder is codirector of the Urban- Brookings Tax Policy Center and a fellow with the Urban Institute. He was previously Treasury deputy assistant secretary for tax analysis under President Clinton and served as director of the IRS Office of Research from 2001 to 2004. Earlier in his career, Toder was deputy assistant director for tax analysis at the Congressional Budget Office. With the Obama administration and Congress gearing up for a potential tax reform effort, Toder recently spoke with Tax Analysts' Meg Shreve to discuss the challenges facing lawmakers as they consider tax reform.

Federal Budget: Fix It Before A Crisis

info@taxpolicycenter.org ( Donald Marron) — Tue, 22 Mar 2011 00:00:00 EST

In a contribution to the CNNMoney.com, Donald Marron discusses the urgent need to reverse the federal deficit and reform the tax code.

After Fannie and Freddie, A Role for Government In Mortgages?

info@taxpolicycenter.org ( Donald Marron) — Tue, 15 Mar 2011 00:00:00 EST

In a contribution to the Christian Science Monitor, Donald Marron rethinks the government's participation in mortgage markets.

Tax Policy and Small Business : Before the U.S. House of Representatives Subcommittee on Select Revenue Measures, Committee on Ways and Means

info@taxpolicycenter.org ( Donald Marron) — Thu, 03 Mar 2011 00:00:00 EST

Donald Marron's testimony before the U.S. House of Representatives Subcommittee on Select Revenue Measures, Committee on Ways and Means on tax policy and small business.

Health Reform: A Four-Tranche System : Updated and Revised

info@taxpolicycenter.org ( Stephanie Rennane, C. Eugene Steuerle) — Tue, 22 Feb 2011 00:00:00 EST

This package of tables considers interactions between four different provisions of government support for health care that exist under the new Health Reform law (the Patient Protection and Affordable Care Act, or PPACA): Medicare, Medicaid, Insurance Subsidies offered through the Exchange, and Employer Sponsored Insurance (ESI). The summary table estimates the value of health benefits to families and singles at various income levels under the four options, and the charts show how these benefit levels change as income rises. Estimates for Medicare benefits are from CMS; estimates of Medicaid premiums are from the Health Policy Center. Backup tables work through the calculations for the value of the exchange subsidy and the tax subsidy for ESI.

Tax Reform In An Era Of Deficits

info@taxpolicycenter.org ( Eric Toder) — Thu, 17 Feb 2011 00:00:00 EST

Tax reform should focus on three goals:1) reducing needless complexity, 2) reducing backdoor spending through the tax code, and 3) reforming rules for taxing saving and investment to make our tax law more suitable for a globalized economy. This note summarizes steps that should be taken and how recent recommendations by the President's Economic Recovery Board, the National Taxpayer Advocate, the President's Fiscal Commission, and the Bipartisan Policy Center provide a road map for future changes.

Tax Reform: The Wheels Are Beginning To Turn

info@taxpolicycenter.org ( Donald Marron) — Wed, 16 Feb 2011 00:00:00 EST

In a contribution to the Christian Science Monitor, Donald Marron discusses strategies to reform Americas broken tax code. Marron proposes ridding the system of corporate and individual tax preferences to create a fairer, simpler, and revenue-generating system with fewer tax breaks and lower rates across the board.

Committees Tackle the Deficit

info@taxpolicycenter.org ( John L. Palmer, Rudolph G. Penner) — Tue, 15 Feb 2011 00:00:00 EST

The United States faces a dire budget problem, largely the result of the aging of the population and soaring health costs. The president's National Commission on Fiscal Responsibility and Reform and the Bipartisan Policy Center's Debt Reduction Task Force both agree that Social Security, Medicare, and Medicaid reforms are necessary, although health costs are the far greater problem. They also recommend restructuring the personal and corporate tax systems. These commissions' efforts show that reasonable policy packages can get bipartisan support even in an intensely partisan era.

Fix the CLASS Act, Don't Repeal It

info@taxpolicycenter.org ( Howard Gleckman) — Tue, 15 Feb 2011 00:00:00 EST

The Community Living Assistance Services and Supports (CLASS) Act is a national, voluntary long-term care insurance program included in the Affordable Care Act of 2010. Some congressional critics would repeal the law. But while the measure is poorly designed, it should be reformed. Changes could increase the marketability of the policies and avoid adverse selection that threatens this insurance program. A successful CLASS program would be a first step towards transforming long-term care from Medicaid to an insurance-based system.

Will It Take a Crisis to Fix Fiscal Policy?

info@taxpolicycenter.org ( Rudolph G. Penner) — Fri, 04 Feb 2011 00:00:00 EST

Unless current policies are reformed, the national debt will continue to grow relative to GDP until a sovereign debt crisis, like those in Ireland and Greece, is inevitable. Although the nation is becoming more concerned about spiraling debt and a presidential fiscal commission and other groups have suggested reforms, the president and congressional leaders have been unwilling to recommend specific policy reforms. Consequently, it is becoming more and more likely that policymakers will not undertake necessary reforms until a financial crisis forces their hand. (This paper will appear in the April 2011 issue of Business Economics.)

Closing Loopholes Won't Be Simple

info@taxpolicycenter.org ( Eric Toder) — Thu, 03 Feb 2011 00:00:00 EST

New York Times' Room for Debate: The United States has one of the world's highest corporate tax rates, but many large U.S. corporations pay little U.S. tax.Eliminating special interest loopholes could pay for some, but not much reduction in the corporate rate.The main problem is that it is hard for one country to tax entities that transcend national boundaries.A better approach would tax more corporate income at the individual shareholder level.The Presidents Fiscal Commission and the Bipartisan Policy Center both recommend reducing individual and corporate tax rates and taxing capital gains and dividends as ordinary income.

Cutting Tax Preferences is Key to Tax Reform and Deficit Reduction : Before the Senate Committee on the Budget

info@taxpolicycenter.org ( Donald Marron) — Wed, 02 Feb 2011 00:00:00 EST

Donald Marron's testimony before the Senate Committee on the Budget on reforming the tax code.

Reforming Federal Taxes: Lessons From History : Before the Senate Committee on the Budget

info@taxpolicycenter.org ( C. Eugene Steuerle) — Wed, 02 Feb 2011 00:00:00 EST

Eugene Steuerle's testimony before the Senate Committee on the Budget on reforming the tax code.

Health Care Brawl: All or Nothing Doesn't Work

info@taxpolicycenter.org ( C. Eugene Steuerle) — Fri, 21 Jan 2011 00:00:00 EST

The ongoing debate over health reform at times almost appears like a sporting event, with Democrats and Republicans trying to name winners and losers in passing or repealing legislation. But in my Fiscal Times op-ed this week, I explain why, when it comes to health reform, this winner-take-all mentality misses a major point: government programs, whether well designed or poorly designed, need to work within budget constraints. While such constraints inevitably identify losers relative to an open-ended budget (which, like deficits, can hide the losers), they do lead to far better budget and health policy.

The Budget Process: A Maze Perverted by Trickery

info@taxpolicycenter.org ( Rudolph G. Penner) — Fri, 21 Jan 2011 00:00:00 EST

The congressional budget process has been so perverted that it no longer imposes much discipline on fiscal decision-making, comments Rudolph Penner, a former director of the Congressional Budget Office. Penner explains how the situation arose and what to do about it.

Debt Ceiling: Geithner Won't Let Us Default

info@taxpolicycenter.org ( Donald Marron) — Thu, 20 Jan 2011 00:00:00 EST

Treasury Secretary Geithner recently warned that the U.S. may default if Congress doesn't increase the federal debt limit. In this guest commentary at CNN Money, Donald Marron explains how Geithner will make sure that the U.S. does not default on the public debt, even if Congress is slow to increase borrowing authority.

The Sum of All We Are

info@taxpolicycenter.org ( C. Eugene Steuerle) — Thu, 13 Jan 2011 00:00:00 EST

What allows us to live and thrive in a good society? To grow and progress so much that we consider it a failure to have a few years of negative or low growth? To live in peace, at least within our borders? To enjoy almost endless possibility?

Activist Fiscal Policy

Tue, 11 Jan 2011 00:00:00 EST

This paper reviews the recent evolution of thinking and evidence regarding the effectiveness of activist fiscal policy. Although fiscal interventions aimed at stimulating and stabilizing the economy have returned to common use, their efficacy remains controversial. This paper reviews the debate about the traditional types of fiscal policy interventions, as well as more targeted policies. It concludes that while there have certainly been some improvements in estimates of the effects of broad-based policies, much of what has been learned recently concerns how such multipliers might vary with respect to economic conditions.

Are You Paying Your Fair Share for Medicare?

info@taxpolicycenter.org ( C. Eugene Steuerle) — Thu, 06 Jan 2011 00:00:00 EST

What do you pay in Medicare taxes? And what Medicare benefits can you expect? It's no secret that early generations of Social Security beneficiaries got benefits worth more than the taxes they had paid, although the most recent waves of retirees getting Social Security can make a stronger case that they have paid for their benefits. But let's leave Social Security aside for the moment to consider an even bigger problem of the same stripe. Past and current retirees, and most working-age adults, will never pay for all their Medicare benefits.

Who Benefits From the Dependent Exemption?

info@taxpolicycenter.org ( Elaine Maag) — Thu, 30 Dec 2010 00:00:00 EST

The dependent exemption reduces taxable income by a fixed amount ($3,650 in 2010) for each qualifying child in the family. Benefits depend on a family's marginal tax rate. Low-income families receive a tax reduction of up to $365 per exemption compared to high income families that receive a tax reduction of $1,278 per exemption. Benefits flow mostly to families with relatively high incomes. In 2010, TPC estimates 1.5 percent of benefits will accrue to families in the lowest income quintile while 57.1 percent of benefits will accrue to families in the top 40 percent of the income distribution.

It's Not About Economic Equality

info@taxpolicycenter.org ( Roberton Williams) — Fri, 17 Dec 2010 00:00:00 EST

In the New York Times' Room for Debate, Roberton Williams discusses the estate tax and why, despite its shortcomings, it still has an important role in federal tax policy.

State Revenue Responses to Fiscal Shortfalls

info@taxpolicycenter.org ( Kim Rueben, Ritadhi Chakravarti) — Fri, 10 Dec 2010 00:00:00 EST

The current economic downturn has resulted in a sharp decline in state tax revenues. Forty-six states faced budget shortfalls when passing their fiscal year (FY) 2011 budgets, and 17 states reported shortfalls of more than 20 percent. According to the National Association of State Budget Officers, in tandem with budget cuts, 40 states enacted legislation to raise tax revenues in some form between fiscal years 2009 and 2011.

Tax Commission Co-chairs Right to Prioritize Analysis of Tax Expenditures

info@taxpolicycenter.org ( C. Eugene Steuerle, Robert Friedman) — Thu, 09 Dec 2010 00:00:00 EST

The American Dream has long meant the opportunity to buy a home, save for retirement, go to college, start a business and build an economic future for oneself and one's family. Small wonder that the federal government plans to spend $4 trillion during the coming decade to try to help us invest in our future. But, as noted by the co-chairs of the National Commission on Fiscal Responsibility and Reform, we're pursuing this shared dream in ways that have become wasteful, regressive and ineffective. We recommend rebalancing our budget. We could cut the national debt by $500 billion or more over a decade, provide more effective subsidies for middle- and low-income families, boost private saving and reduce the demands on our welfare system. We could be on our way to a true "save and invest" economy.

Have Recent Budget Policies Contributed to Long-Run Fiscal Stability?

info@taxpolicycenter.org ( John L. Palmer, Rudolph G. Penner) — Wed, 08 Dec 2010 00:00:00 EST

The United States is on a disastrous fiscal path. In the conflict between restoring solvency and stimulating the economy, the president's budget is more focused on the latter. Yet even before the recession Medicare and Medicaid, along with Social Security, accounted for almost 50 percent of noninterest spending. Payouts have risen rapidly since, and these entitlements are growing faster than the economy and tax revenues. Whether the 2010 health reform and other recent budget balancing measures have helped stabilize the deficit is explored in this report.

A Recovery Shipwreck: Can It Be Avoided?

info@taxpolicycenter.org ( C. Eugene Steuerle) — Thu, 02 Dec 2010 00:00:00 EST

In a recent commentary for the Ripon Forum, I argued that budget reform isn't only necessary but possible. Unlike many problems such as poverty or terrorism, an imbalanced budget is largely self-imposed. A crucial ingredient for reform, however, is a process whereby each political party can hold the other accountable for failure.

Alternative to the Alternative: The Economic Effects of AMT Reform

info@taxpolicycenter.org ( Benjamin H. Harris, Daniel Baneman) — Wed, 01 Dec 2010 00:00:00 EST

This article examines the economic benefits of alternative minimum tax reform relative to the current policy baseline. The authors find that AMT reform can lead to improved progressivity, greater efficiency, and a lessened compliance burden while raising an equal amount of revenue.

Taxes and the Deficit Reduction Plans

info@taxpolicycenter.org ( William G. Gale) — Wed, 24 Nov 2010 00:00:00 EST

Plans to rein in the U.S. budget deficit remain in the spotlight as the Bipartisan Policy Center's Debt Reduction Task Force released its plan to solve the debt crisis. TPC expert William Gale offers analysis of the recommendations and includes recommendations of his own.

Clean Up the Tax Code

info@taxpolicycenter.org ( Donald Marron) — Tue, 23 Nov 2010 00:00:00 EST

In a contribution to the New York Times Room for Debate, Donald Marron argues that the best way for the government to raise new revenue would be to reduce and in some cases eliminate many of the exemptions, exclusions, deductions, and credits that make Swiss cheese of our tax system.

Simplicity: Considerations in Designing a Unified Child Credit

info@taxpolicycenter.org ( Elaine Maag) — Mon, 22 Nov 2010 00:00:00 EST

Complexity plagues the tax code for low-income families, particularly with regard to child related credits. Many analysts advocate separating out the essential functions of these credits: subsidizing work, subsidizing children, and subsidizing specifi c activities such as child care. This paper analyzes design considerations in creating a unifi ed child credit and offers options for reforms that range from a complete overhaul of the child and work incentives to a more minor consolidation of highly related tax incentives. Either could form the foundation for reform efforts aimed at simplifying and rationalizing the federal income tax code with respect to children.

Tax Savings From an Additional Child

info@taxpolicycenter.org ( Eric Toder) — Fri, 05 Nov 2010 00:00:00 EST

Provisions in the tax law that benefit families with children include the child tax credit, personal exemptions for dependent children, the earned income tax credit, availability of head of household filing status, the child and dependent care credit, and tuition tax credits and deductions for higher education. These six benefits average about $1,656 for the last (and youngest) child in a family. The average benefit per child is higher for middle income taxpayers than for low-income filers (who don't benefit from personal exemptions and non-refundable credits) and high-income filers (who don't receive benefits that phase out at higher incomes).

A New Tax Bracket for Millionaires?

info@taxpolicycenter.org ( Jim Nunns, Rachel M. Johnson) — Thu, 04 Nov 2010 00:00:00 EST

The debate over extending the 20012003 tax cuts beyond 2010 has revolved around two options: extend all provisions for all taxpayers, and the presidents proposal to extend all provisions except those that apply only to high-income taxpayers. A third option has drawn attention: extend the 20012003 tax cuts fully for all taxpayers except those with income over $1 million. This paper explores alternate ways to structure an additional tax rate on millionaires (as defined by annual income, not wealth), but does not consider other alternatives, such as eliminating or reducing tax preferences, that would increase tax liabilities of millionaires without raising marginal tax rates.

Our Newly Elected Tax Collectors

info@taxpolicycenter.org ( C. Eugene Steuerle) — Thu, 04 Nov 2010 00:00:00 EST

Call it happenstance, but in the gospel proclaimed in many Christian churches on Sunday, October 24about a week before the electionJesus admonishes those "convinced of their own self-righteousness," then makes a tax collector the hero in the parable cited. Actually, tax collectors seem to come out okay in a lot of religious stories; take the Buddhist one about the brahmin Dhananjani, an unscrupulous tax collector who exploited both the king and the public, yet still could at death attain a happier rebirth. Not to downplay these religious themes, but I couldn't help seeing a secular twist: more than in any recent period, our newly elected representatives, many of whom ran on platforms of self-righteousness, are called to be our tax collectors.

The Biggest Tax Policy Mistake of the Year

info@taxpolicycenter.org ( Donald Marron) — Mon, 18 Oct 2010 00:00:00 EST

In a contribution to the New York Times Freakonomics blog, Donald Marron identifies this year's biggest tax policy mistake: Washington's inability to decide what this year's tax law is. While politicians, analysts and the media endlessly debate how expiring tax cuts might affect taxpayers in 2011, we still don't know what the tax law is in 2010.

What the Housing Crisis Means for State and Local Governments

info@taxpolicycenter.org ( Kim Rueben, Serena Lei) — Tue, 12 Oct 2010 00:00:00 EST

As the US housing market experiences its largest contraction since the Great Depression, the Lincoln Institute of Land Policy and the Urban-Brookings Tax Policy Center took a closer look at the consequences of this crisis for state and local governments in a May 2010 conference.This article summarizes the conference events.

Can Budget Offices Help Us Address Demographic Pressure?

info@taxpolicycenter.org ( C. Eugene Steuerle) — Mon, 20 Sep 2010 00:00:00 EST

As pressures mount on the nation's long-term budget, the Congressional Budget Office now views the aging of the population as the main stressor and health care costs as a close second. Yet, CBO and the Office of Management and Budget (OMB) have traditionally offered only limited analysis and estimates on addressing these demographic concerns, often leaving them to the Social Security Administration, which focuses only on the Social Security piece of the budget puzzle

America's Related Fiscal Problems

info@taxpolicycenter.org ( C. Eugene Steuerle) — Wed, 08 Sep 2010 00:00:00 EST

In a point-counterpoint with Henry Aaron, senior fellow at the Brookings Institution, Eugene Steuerle discusses five pressing fiscal problems facing America, and suggests tax and budget reform options to address these issues. This discourse includes agreement and disagreement, yet is honestly presented without the noise and confusion that often surround these issues. Steuerle's and Aaron's essays originally appear in the Journal of Policy Analysis and Management. Steuerle, C.E. (2010) "America's Related Fiscal Problems." Journal of Policy Analysis and Management, 29(4), 876-883.

Why We Must Untie Our Fiscal Straightjacket: A Response to Henry J. Aaron

info@taxpolicycenter.org ( C. Eugene Steuerle) — Wed, 08 Sep 2010 00:00:00 EST

Eugene Steuerles response Henry Aaron in a point-counterpoint debate about Americas fiscal struggles. This discourse includes agreement and disagreement, yet is honestly presented without the noise and confusion that often surround these issues. Steuerles and Aarons essays and responsesto each other originally appear in the Journal of Policy Analysis and Management. Steuerle, C.E. (2010) Why We Must Untie Our Fiscal Straightjacket: A Response to Henry J. Aaron. Journal of Policy Analysis and Management, 29(4), 891-893.

Catastrophic Budget Failure

Wed, 01 Sep 2010 00:00:00 EST

Continuation of current U.S. fiscal policy will lead to an enormous accumulation of debt with potentially disastrous economic consequences. Exacerbated by the recent economic turmoil and fueled by the willingness of creditors to lend at very low interest rates, there is signifi cant risk that necessary fi scal reform will be put off. In this paper, we consider the causes, mechanisms, and macroeconomic fallout of a catastrophic budget failure a situation in which markets perception of the credit worthiness of the U.S. government rapidly deteriorates, leaving it unable to access credit markets at any reasonable rate of interest and generating a high probability of the previously unthinkable: the U.S. government defaulting on its debt obligations.

Lowering the Heat Around Raising Retirement Age

info@taxpolicycenter.org ( C. Eugene Steuerle) — Fri, 27 Aug 2010 00:00:00 EST

In commentary for the San Francisco Chronicle, Gene Steuerle asserts that all of the following myths about Social Security retirement ages are wrong: (1) increasing the retirement age will reduce benefits; (2) increasing the retirement age discriminates against lower-income workers with shorter life expectancies; (3) increasing the retirement age makes Social Security reform regressive; (4) Social Security Old Age Insurance goes to the old; and (5) the elderly need to fear such Social Security reforms as increasing the retirement age.

Five Myths about the Bush Tax Cut

info@taxpolicycenter.org ( William G. Gale) — Tue, 03 Aug 2010 00:00:00 EST

The tax cuts enacted in 2001 and 2003, known as the Bush tax cuts, are set to expire Dec. 31, and the fight over what to do is increasingly heated. Should the tax cuts expire, as some Democrats have said? Should they be extended, as most Republicans maintain? Or does the answer lie somewhere in between, as the Obama administration, led by Treasury Secretary Timothy Geithner, has argued in recent weeks?

Extending Tax Credits for Low-Income Families

info@taxpolicycenter.org ( Elaine Maag) — Mon, 19 Jul 2010 00:00:00 EST

Policymakers should be thinking hard about low-income families with children and the tax code. In 2010, the federal income tax system will deliver substantial assistance to these families through refundable tax credits. The Tax Policy Center estimates a third fewer children would be in poverty if tax credits were counted in a persons available resources when measuring poverty. They are among the most potent anti-poverty programs for families with children. In 2011, some aid targeted to the poorest families will disappear as the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) and the American Recovery and Reinvestment Act (ARRA).

The Fight Over Fiscal Rectitude: Politics or Economics?

info@taxpolicycenter.org ( C. Eugene Steuerle) — Thu, 15 Jul 2010 00:00:00 EST

Decades ago, my parents taught me a simple lesson: when something goes awry and its outcome remains uncertain, do what you can and should do to the best of your capability. The future may not be entirely in your control, but by setting some good things in motion you make tough issues easier to handle.

Kids' Share 2010: Report on Federal Expenditures on Children through 2009

Wed, 14 Jul 2010 00:00:00 EST

Kids' Share 2010: Report on Federal Expenditures on Children through 2009, a fourth annual report, looks comprehensively at trends in federal spending and tax expenditures on children. Key findings suggest that historically children have not been a budget priority. In 2009, this trend continued, as children's spending accounted for less than one-tenth of federal outlays. While the American Recovery and Reinvestment Act provides a temporary boost, children's spending will continue to be squeezed in the next decade.

The Future of Individual Tax Rates: Effects on Growth and Distribution : Donald Marron's Testimony Before the Senate Committee on Finance

info@taxpolicycenter.org ( Donald Marron) — Wed, 14 Jul 2010 00:00:00 EST

Donald Marron's testimony before the Senate Committee on Finance on the individual tax system.

The Future of Individual Tax Rates: Effects of Economic Growth and Distribution : Leonard Burman's Testimony before the Senate Committee on Finance

info@taxpolicycenter.org ( Leonard E. Burman) — Wed, 14 Jul 2010 00:00:00 EST

Leonard Burman's testimony before the Senate Committee on Finance on whether and how to extend the 2001 and 2003 tax cuts.

The Impact of the Bipartisan Tax Fairness and Simplification Act of 2010 ("Wyden-Gregg") on Effective Marginal Tax Rates

info@taxpolicycenter.org ( Katherine Lim, Jeff Rohaly) — Wed, 14 Jul 2010 00:00:00 EST

The Wyden-Gregg tax reform proposal would represent a broad reform of the federal income tax system. This paper examines the plan's impact on individuals' effective marginal tax rates (EMTR), the incremental amount of tax owed on an additional dollar of income. We examine the impact on the EMTR for both wage income and realized capital gains against current law and current policy baselines. We find the Wyden-Gregg plan would lower the overall average EMTR on wages relative to both current law and current policy, but would raise the overall average EMTR on gains when compared with those same two baselines.

How Social Security Can Costlessly Offset Declines in Private Pension Protection

info@taxpolicycenter.org ( C. Eugene Steuerle) — Wed, 30 Jun 2010 00:00:00 EST