The voices of Tax Policy Center's researchers and staff
The House may have a bipartisan transportation bill. The measure would authorize highway spending for another six years. But while it sets $325 billion in infrastructure spending over six years, it guarantees only the first three years of funding. The last three years? Congress would have to “unlock” funding after it identifies offsets. In other words, call us in 2018. Current funding expires in ten days.
Congress has a seemingly impossible task regarding the debt limit. TPC’s Howard Gleckman speculates on how the fall will play out. The federal government will be unable to pay its bills in as little as two weeks. Will outgoing House Speaker John Boehner assemble a bipartisan coalition to secure an 18-month debt limit extension and still get a budget? Could Congress agree to a 2016 budget that would deal with expired tax breaks, highway funding, an unanticipated hike in Medicare premiums, and the Export-Import Bank before New Year’s Eve? Putting it mildly: “That is a lot to do with little margin for error,” says Gleckman.
Waiting for Chairman Ryan. Will the Ways & Means Committee chair throw his hat in the ring for House speaker or not? CBS reports he is “open” to the idea but won’t negotiate terms with GOP hardliners. Over the past week, some conservatives kicked off a grassroots campaign to block Ryan, whom they deem excessively moderate. If Ryan takes the Speakership, expect a battle for his post on Ways & Means.
Speaking of seemingly impossible: GOP presidential candidate John Kasich has a tax plan. Ohio’s governor wants to cut the current top individual income tax rate of 39.6 percent down to 28 percent and boost the Earned Income Tax Credit. Kasich says details are forthcoming, but promises he’d balance the budget in part by giving states the responsibility to fund Medicaid, welfare, and highway construction.
What about raising taxes on the rich? GOP candidates call for tax cuts on the wealthy, but what about raising them on the top one percent? The New York Times considers the 1.13 million households that bring home an average annual income of $2.1 million. Raising their total tax burden from 33.4 percent to 40 percent would generate about $157 billion in revenue the first year. If the 115,000 households earning an average income of $9.4 million faced a 40 percent tax rate, tax revenues would climb by $55 billion in the first year. “Most economists today would agree that raising taxes modestly would bring in more revenue” without doing any serious damage to the economy, said TPC’s Bob Williams.
“If it only had a brain, a heart, the nerve… and a carbon tax.” Alas, Volkswagen cheated, making its diesel cars appear “cleaner” than they are and eligible for a now-dead but then-lucrative tax subsidy. TPC’s Howard Gleckman suggests that a carbon tax might have eliminated the temptation that VW couldn’t ignore. If carbon were taxed, government wouldn’t have to test carbon emissions from tens of millions of cars. It would only need to calculate the carbon content of their fuel. As for automakers who lie about fuel efficiency, they couldn’t do it for long. Consumers would find out the minute they fill their tanks.
Interested in subscribing to the Daily Deduction, the Urban-Brookings Tax Policy Center summary of the day’s tax news? Sign-up here to get the Daily Deduction delivered to your inbox every morning. If you’d like to tell us about a new research paper or have any comments about our feature, write us at dailydeduction “at” taxpolicycenter “dot” org.
Posts and Comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.