Programs for working families and children are scheduled to shrink rapidly over the next few years, squeezed between rising expenditures on programs for the elderly and declines in tax revenues. This scenario will play out even if only modest defense and international needs are factored into the...
In a tax system with increasing marginal tax rates, the tax increase from a boost to income is at least equal to the tax reduction from a decline in income and is larger if the change in income crosses a marginal tax bracket. As a result, people with volatile incomes may pay more tax than people...
Here's one message from the new "bipartisan" Medicare bill being debated in Congress: low-income elderly people are having a hard time paying for their prescription drugs, so we need...another tax cut for rich people! Today's tax cut for rich people—health savings accounts (HSA)—has been all but...
In this article from U.S. Fixed Income Monthly, Rudy Penner argues that the political response today to the deteriorating budget situation is much different from the 1980s. In the 1980s and early 1990s, Congress worked vigorously to restore fiscal responsibility. There is little evidence...
Tax expenditures refer to the revenue losses attributable to provisions of the federal tax laws that deviate from a "normal" tax on income. Although there are debates over precisely what a tax expenditure is, many exclusions, deductions, credits, preferential rates, and deferrals of tax...
The Congressional Budget Office's midyear update of the economic and budget outlook, released in late August, provides an opportunity to glean new perspectives on the fiscal status of the federal government. In a prior article, we adjusted the baseline projections to provide more appropriate...
This note considers four options to raise approximately enough revenue to finance the additional $87 billion that the President has requested to finance the war and reconstruction costs in Iraq. Commentators and some members of Congress have expressed an interest in options to offset these...
Health costs now total close to one-fifth of households' personal income. For moderate-income workers whose cash wages are lower then they would be if employers weren't paying for their health insurance, the bite is often bigger. Many elected officials seeking health care reform don't even know...
The CBO's new budget update provides the opportunity to reassess fiscal prospects and reconsider policy options. This paper examines the baseline CBO projections and adjusts the official data in ways that we believe more accurately reflect the current trajectory of tax and spending policies and...
An individual's marginal tax rate--the additional tax that would be owed on an additional dollar of income--is an important indicator of how the tax system affects incentives to work, save, and comply with the tax system. It is natural to think of marginal tax rates as identical to the statutory...
The Incredible Shrinking Budget for Working Families and Children
Programs for working families and children are scheduled to shrink rapidly over the next few years, squeezed between rising expenditures on programs for the elderly and declines in tax revenues. This scenario will play out even if only modest defense and international needs are factored into the...
Taxes and Income Volatility
In a tax system with increasing marginal tax rates, the tax increase from a boost to income is at least equal to the tax reduction from a decline in income and is larger if the change in income crosses a marginal tax bracket. As a result, people with volatile incomes may pay more tax than people...
HSAs Won't Cure Medicare's Ills
Here's one message from the new "bipartisan" Medicare bill being debated in Congress: low-income elderly people are having a hard time paying for their prescription drugs, so we need...another tax cut for rich people! Today's tax cut for rich people—health savings accounts (HSA)—has been all but...
Are Current Budget Deficits More Worrisome Than Those of the 1980s?
In this article from U.S. Fixed Income Monthly, Rudy Penner argues that the political response today to the deteriorating budget situation is much different from the 1980s. In the 1980s and early 1990s, Congress worked vigorously to restore fiscal responsibility. There is little evidence...
Tax Expenditures: Revenue Loss Versus Outlay Equivalents
Tax expenditures refer to the revenue losses attributable to provisions of the federal tax laws that deviate from a "normal" tax on income. Although there are debates over precisely what a tax expenditure is, many exclusions, deductions, credits, preferential rates, and deferrals of tax...
The Budget Outlook: Analysis and Implications
The Congressional Budget Office's midyear update of the economic and budget outlook, released in late August, provides an opportunity to glean new perspectives on the fiscal status of the federal government. In a prior article, we adjusted the baseline projections to provide more appropriate...
Options to Finance the Additional War Costs
This note considers four options to raise approximately enough revenue to finance the additional $87 billion that the President has requested to finance the war and reconstruction costs in Iraq. Commentators and some members of Congress have expressed an interest in options to offset these...
When Are Health Costs Excessive If $15,000 Is Average?
Health costs now total close to one-fifth of households' personal income. For moderate-income workers whose cash wages are lower then they would be if employers weren't paying for their health insurance, the bite is often bigger. Many elected officials seeking health care reform don't even know...
The Budget Outlook
The CBO's new budget update provides the opportunity to reassess fiscal prospects and reconsider policy options. This paper examines the baseline CBO projections and adjusts the official data in ways that we believe more accurately reflect the current trajectory of tax and spending policies and...
Hidden Taxes and Subsidies
An individual's marginal tax rate--the additional tax that would be owed on an additional dollar of income--is an important indicator of how the tax system affects incentives to work, save, and comply with the tax system. It is natural to think of marginal tax rates as identical to the statutory...