Individual Taxes: TaxVox

Caps and “Gold Plated” Health Plans

NPR interviewed me about “gold plated” health plans. I am a big proponent of capping the tax benefits for overly generous plans as part of health reform. Critics responded that many low-income people with modest insurance plans could be hit by a cap simply because they work for a small firm, have health problems, are old, or live in a high-cost region. It's a valid point if a cap were enacted in isolation. Much of the variation in insurance premiums is not attributable to differences in the generosity of benefits. But some of it is.
July 31, 2009Leonard E. Burman
Federal Budget and Economy: TaxVox

Loose Handcuffs

Way back in the last century, PAYGO rules in the 1990 Budget Enforcement Act (BEA) helped control spending and contributed significantly to four years of budget surplus. Since BEA expired after 2002, looser PAYGO rules have applied and Congress has repeatedly chosen to ignore them. That was easy since violating PAYGO could only trigger a point of order, which was pretty easy to overcome, at least in the House. The Senate requires 60 votes to beat back a point of order but senators got around that by putting tax cuts and spending increases in budget resolutions, which are not subject to points of order.
July 30, 2009Roberton C. Williams
Individual Taxes: TaxVox

Kerry’s Premium Tax

Senator Kerry has floated the idea of a tax on high premiums as an alternative to caps on the exclusion for employer-sponsored health insurance (ESI). There are no public details, but press reports indicate bipartisan interest in the idea. The proposal would tax insurers and self-insured employer plans if the average premium “substantially” exceeded the highest premium on policies offered to federal employees under the Federal Employees Health Benefits Plan (FEHBP).
July 29, 2009Leonard E. Burman
Business Taxes: Research report

Mitigating the Potential Inequity of Reducing Corporate Rates

Some tax proposals would reduce the marginal corporate tax rate. Others would boost the top individual rate. Although a differential between corporate and individual rates could reduce the overall tax on distributed corporate income, it could also enable higher-income taxpayers to shelter income
July 29, 2009Dan Halperin
Individual Taxes: TaxVox

Presidential Movement

As Congress and the administration grope their way toward healthcare reform, a major obstacle is financing: how do we pay the $1 trillion cost over the next decade? Many economists and members of Congress favor reducing or eliminating the tax exclusion of premiums paid for employment-based health insurance (ESI). We owe no income or payroll tax on the premiums our employers pay. The exclusion will cut an estimated $240 billion from federal revenues next year and $3.5 trillion over ten years. And it hits state tax collections too.
July 28, 2009Roberton C. Williams
Individual Taxes: Testimony

Conversations: Leonard Burman

Tax Notes, July 27, 2009. Leonard E. Burman is a fellow at the Urban Institute and director of the Urban-Brookings Tax Policy Center. He previously served as deputy assistant secretary for tax analysis at the Treasury Department from 1998 to 2000 and as senior analyst at the Congressional Budget
July 28, 2009Sam Young
Individual Taxes: TaxVox

Targeting Obesity

A few weeks back, I discussed proposals to reduce obesity by taxing junk food. I argued that such a tax could encourage healthier eating but would be difficult to design and would hit low-income families the hardest. Now a new report by the University of Virginia’s Carolyn Engelhard and Arthur Garson and the Urban Institute’s Stan Dorn addresses some of these issues.
July 23, 2009Jacob Goldin
Individual Taxes: TaxVox

California Scheming

I was going to make a (fiscal) new year's resolution to stop picking on California. There are, after all, 49 other states doing things that don’t necessarily pass the good governance test, but the latest Golden State deal warrants comment. It would close the reputed $26 billion deficit by cutting spending by $15.5 billion, selling off assets, and deferring payments. Despite histrionics, the agreement comes less than a month into the budget year, much sooner than in past years.
July 22, 2009Kim S. Rueben
Individual Taxes: TaxVox

How Should We Tax Climate Change Permits?

Now that the House has decided to give away, rather than auction, most CO2 emission permits, I’ve been wondering how Treasury is going to tax this windfall. There is a huge amount of money at stake--by some estimates more than $100 billion-a-year in emissions permits. Remember, how they would work: Congress would turn the right to emit CO2 into a valuable, saleable asset. Into, one might say, money. The companies that receive these permits—mostly big producers or generators of fossil fuels such as oil refiners or utilities—could either use them for the right to pollute or sell them.
July 21, 2009Howard Gleckman
Federal Budget and Economy: Research report

Distributional Effects of Tax Expenditures

The largest tax preferences for housing, health care, and retirement saving reduce federal revenues by about 3 percent of GDP. They raise after-tax income proportionally more for higher income groups than lower income groups, but raise income proportionately less for those at the very top. The net
July 21, 2009Benjamin H. HarrisKatherine LimEric Toder
Individual Taxes: TaxVox

Will A Surtax Encourage More Gold-Plated Health Coverage?

Imagine you are a successful business owner confronting the House Democrats’ proposed tax rate hike. Your first question: How do I shelter as much of my income as possible? Will one answer be to buy the richest, most generous health insurance policy you can find? It only makes sense. Why take cash compensation that could face a top rate of more than 45 percent when you could easily get more tax-free health insurance? Forget Cadillac plans. Now we’re talking Lamborghini coverage.
July 16, 2009Howard Gleckman
Individual Taxes: TaxVox

Paying for Health Reform By Taxing the Rich—An Update

Now we know how many American taxpayers will be asked to pay for health reform under the new tax rate structure being designed by House Democrats: about 2 million. That would be a bit more than 1 percent of all taxpayers. They’d be asked to pay an additional $540 billion in taxes over the next 10 years, while those making less than $350,000 would be asked to contribute approximately nothing. Seems fair to me. According to the draft House bill, starting in 2011 those making more than $1 million would pay a surcharge of 5.4 percent. Add that to President Obama’s plan to restore the pre-Bush top rate of 39.6 percent and the new maximum marginal rate would be an even 45 percent. You can also add a couple of extra percentage points thanks to Obama’s plan to restore the pre-Bush limits on personal exemptions (PEP) and itemized deductions (Pease).
July 14, 2009Howard Gleckman
Campaigns, Proposals, and Reforms: Current Law

T09-0352 - Average Effective Marginal Individual Income Tax Rates, Distribution by Cash Income Level, 2011

Distribution by cash income level of the effective marginal tax rate under the Admnistration's baseline, current law, the Administration's FY 2010 budget, current law and the proposed health surcharge, and the proposed budget with the surcharge.
July 14, 2009
Campaigns, Proposals, and Reforms: Current Law

T09-0353 - Average Effective Marginal Individual Income Tax Rates, Distribution by Cash Income Percentile, 2011

Distribution by cash income percentile of the effective marginal tax rate under the Admnistration's baseline, current law, the Administration's FY 2010 budget, current law and the proposed health surcharge, and the proposed budget with the surcharge.
July 14, 2009
Individual Taxes: Current Law

T09-0354 - Tax Units with a Change in Effective Marginal Individual Income Tax Rates (EMTR), Health Surcharge versus Current Law, Distribution by Cash Income Level, 2011

Distribution by cash income level of the proportion of tax units facing an increase, decrease, or the same marginal tax rate with the proposed health surcharge.
July 14, 2009
Individual Taxes: Current Law

T09-0355 - Tax Units with a Change in Effective Marginal Individual Income Tax Rates (EMTR), Health Surcharge versus Current Law, Distribution by Cash Income Percentile, 2011

Distribution by cash income percentile of the proportion of tax units facing an increase, decrease, or the same marginal tax rate with the proposed health surcharge.
July 14, 2009
Federal Budget and Economy: Brief

Washington Times Op-Ed: Catastrophic Budget Failure

In a Washington Times op-ed, Len Burman explains why even this gloom-and-doom outlook is "wildly over-optimistic." The latest CBO budget outlook predicts a bleak scenario if we don't change our current policies.
July 14, 2009Leonard E. Burman
Campaigns, Proposals, and Reforms: Current Law

T09-0347 - America's Affordable Health Choices Act of 2009 Surcharge on High Income Individuals, Baseline: Current Law, Distribution of Federal Tax Change by Cash Income Level, 2011

2011 distribution, by cash income level, of the surcharge on high income individuals in "America's Affordable Health Choices Act of 2009" under a current law baseline.
July 13, 2009
Campaigns, Proposals, and Reforms: Current Law

T09-0348 - America's Affordable Health Choices Act of 2009 Surcharge on High Income Individuals, Baseline: Current Law, Distribution of Federal Tax Change by Cash Income Percentile, 2011

2011 distribution, by cash income percentile, of the surcharge on high income individuals in "America's Affordable Health Choices Act of 2009" under a current law baseline.
July 13, 2009
Campaigns, Proposals, and Reforms: Health Care

T09-0349 - America's Affordable Health Choices Act of 2009 Surcharge on High Income Individuals, Baseline: Administration Baseline, Distribution of Federal Tax Change by Cash Income Level, 2011

2011 distribution, by cash income level, of the surcharge on high income individuals in "America's Affordable Health Choices Act of 2009" under an Administration baseline.
July 13, 2009
Campaigns, Proposals, and Reforms: Health Care

T09-0350 - America's Affordable Health Choices Act of 2009 Surcharge on High Income Individuals, Baseline: Administration Baseline, Distribution of Federal Tax Change by Cash Income Percentile, 2011

2011 distribution, by cash income percentile, of the surcharge on high income individuals in "America's Affordable Health Choices Act of 2009" under an Administration baseline.
July 13, 2009

T09-0351 - Distribution of Tax Units with Business Income, by Modified Adjusted Gross Income Level, 2011

Distribution of tax units with schedule C, E, or F income by modified adjusted gross income broken down by filing status for 2011.
July 13, 2009
Individual Taxes: TaxVox

Taxing the Rich

A few thoughts on the House Democrats’ still-evolving plan to pay for close to half of health reform by raising marginal rates on the highest earning taxpayers: *By allowing the Bush tax cuts to expire, restoring the phase-outs of the personal exemption (PEP) and itemized deductions (Pease), and now by proposing a ‘surcharge” of 2 percent or more, Democrats would be boosting the top individual tax rate from the Bush-era 35 percent to nearly 45 percent, ever-closer to the 50 percent top rate of 1985.
July 13, 2009Howard Gleckman
Federal Budget and Economy: Current Law

T09-0346 - Tax Units by Adjusted Gross Income, 2011

2011 distribution of tax units by adjusted gross income categories. Married filing joint tax units with AGI above $350,000 and all others with AGI above $280,000 are potentially subject to the proposed House Ways and Means health reform surtax.
July 11, 2009
Federal Budget and Economy: Brief

Give Up A Benefit, Gain Jobs

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.
July 10, 2009Leonard E. Burman