The House Republican Study Committee offers an alternative budget. The committee’s plan would cut spending by $7.1 trillion over the next decade but would give the Pentagon $570 billion for fiscal year 2016, well above the $523 billion spending cap set back in 2011. Revenues would change, too: The plan calls for just two individual tax brackets, top individual and corporate rates of 25 percent, and a top dividend rate of 15 percent. The committee would sunset the current tax code by 2019, effectively setting a deadline for tax reform, and repeal the Affordable Care Act through reconciliation.
And House Democrats have a budget, too. Their plan would end the 2011 sequestration, boost defense spending to $561 billion in the next fiscal year, and allow for $1.091 trillion in non-discretionary spending. The $3.7 trillion budget would not balance over 10 years.
Senator Marco Rubio has an Affordable Care Act alternative. The presidential hopeful from Florida has a plan to insure Americans, should King v. Burwell end the Affordable Care Act. Rubio’s plan would give people refundable tax credits to buy health insurance; annually increases would eventually make them equivalent to the tax preference given to employer-based plans. Medicare enrollees would receive a payment to be used to purchase insurance in a marketplace. As for Medicaid: States would receive capped federal payments based on the number of a state’s enrollees.
Governor Bobby Jindal has a plan to increase tax revenue without raising rates. TPC’s Norton Francis thinks Louisiana’s governor and presidential hopeful “may have found the promised land of conservative tax policy. He’s promoting a plan to raise $526 million without a tax increase. His trick: Turn refundable business credits into non-refundable credits.” Why isn’t that a tax increase? Because Jindal treats tax credits as spending programs: It’s an approach that could help the state tackle its deficit.
There’s no such thing as a free lunch, or free tax refund advance. Regulators want to improve oversight of the $10.1 billion tax prep industry’s preparers. More Americans—21.6 million in 2014, up 17 percent since 2011—are taking up offers of “refund anticipation checks” that are really just short-term loans with high effective interest rates. About half of these taxpayers received the Earned Income Tax Credit and more than five out of six have low income. They may not understand how expensive a refund advance can be: Tax-preparation fees vary widely but have averaged $273 for 2014 returns.
How does tax policy affect investment in startup companies? TPC’s Donald Marron and Joseph Rosenberg consider the evidence in their contribution to the Ewing Marion Kauffman Foundation’s online Policy Dialogue on Entrepreneurship. Drawing on their recent paper, they argue that startups often make losses, and thus cannot make immediate use of the R&D tax credit, accelerated depreciation, and other tax benefits.
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