TaxVox

The voices of Tax Policy Center's researchers and staff

Federal Budget and Economy

Uncle Sam’s Club Card

December 17, 2008 –
TPC’s Len Burman has come up with an interesting stimulus idea: “Send everyone with a Social Security number a prepaid card, like the ones offered by major credit-card companies. The money could be spent at any retailer that accepted the company’s credit cards. In principle, the card would be the same as cash, and might still allow consumers to save more. In practice, we know from behavioral economics that labeling matters. If people get a card that they can only use if they spend the money, their spending is likely to increase more than if they can bank a rebate check.” Here is his entire post at Economix.
Individual Taxes

VATs Next?

December 16, 2008 –
Is it time for the U.S. to consider a Value Added Tax? More and more tax experts think so. But the politics isn’t yet getting easier. One problem: While more specialists are joining the VAT fan club, they can’t agree on what to do with the money. TPC’s Len Burman has proposed a VAT to supplement the income tax and pay for health care. Michael Graetz, once a top tax aide to the senior George Bush, would use one to get most Americans off the income tax. At the TPC/Tax Analysts tax reform conference on Dec. 5, Pam Olson, who was a top tax aide to the today’s President Bush, endorsed the levy as a way to buy down corporate tax rates. Once the tab comes in for the trillions of dollars Washington is spending to stimulate the economy and bail out the financial markets, I am certain others will propose a VAT simply to help pay the bills.
Individual Taxes

Did the Double Tax on Corporate Income Kill the Economy?

December 11, 2008 –
Did bad tax policy help cause the economic meltdown? Former assistant Treasury Secretary for Tax Policy Pam Olson thinks so. Speaking at a Dec. 5 tax reform conference sponsored by TPC and Tax Analysts, Pam fingered what she called an “anti-equity and pro-leverage” Internal Revenue Code as one culprit in the collapsing credit markets. TPC’s Bill Gale agrees--after a fashion--although other tax experts are unconvinced.
Federal Budget and Economy

Bleeding Red Ink

December 10, 2008 –
The federal budget deficit has worsened over the past year as the economy collapsed into recession, Congress once again patched the alternative minimum tax (AMT), and the Treasury took steps to stabilize credit markets and rejuvenate the economy. Red ink drenches the federal budget for the foreseeable future.
Individual Taxes

The Wrong Time for Tax Credits

December 9, 2008 –
Just as demand for both alternative energy and low-income housing is growing, is the market drying up for the tax credits that drive much of the investment in both? Evidence is that the answer is “yes.” The culprits: the crumbling economy, paralyzed bond markets, and the government itself. This may be yet another example of the always-deadly law of unintended consequences.
Federal Budget and Economy

Bailing Out Chrysler

December 4, 2008 –
The headlines today say Chrysler has asked Congress for a bridge loan of $7 billion on top of the $8.5 billion it already requested to subsidize development of fuel efficient cars. But it is not exactly Chrysler that is asking for the money. Rather it is its majority shareholder: the private equity firm Cerberus Capital Management. Thus I cannot help but wonder whether the true beneficiaries of this transaction will be Cerberus and its partners rather than Chrysler’s workers, suppliers, and dealers.
Federal Budget and Economy

Deficits and The Future: Other Views

December 2, 2008 –
I just finished moderating an Urban Institute panel discussion featuring three confirmed deficit hawks—former CBO directors Bob Reischauer and Rudy Penner, and TPC’s Len Burman. The question on the table: What will the now-official recession and the federal government’s massive deficits mean for Barack Obama’s hugely ambitious domestic agenda?
Individual Taxes

A Not-So-Sweet Story of the Value-Added Tax

November 27, 2008 –
Before you head out for Black Friday shopping, take note of what can happen with a European-style Value-Added Tax run amok, courtesy of our friends at TaxProf. In a paper presented Nov. 18 at the University of Connecticut Tax Lecture Series, Oxford University's Rita de la Feria described the amusing but instructive case of Jaffa Cakes. If these confections were indeed cake, they would be treated as food and thus exempt from the VAT. If, however, they were cookies, they would be subject to the full 17.5 percent rate.
Federal Budget and Economy

What Should Obama’s Stimulus Look Like?

November 25, 2008 –
Barack Obama has set quite a goal for himself: He wants a fiscal stimulus that will both boost today's economy and lay the groundwork for "long-term sustained… growth." Doing both will not be easy. In fact, it may not be possible. So which is more important?
Individual Taxes

Will Recession Make Health Reform Easier for Obama?

November 24, 2008 –
It seems paradoxical, but some well-connected health reformers are arguing that a costly remake of U.S. insurance may be more likely in the wake of the economic slump. Their theory: Since we are already spending hundreds of billions to bail out the financial system and since the Obama Administration is likely to pump out a similar amount in fiscal stimulus early next year, the time may be right to spend a few hundred billion more on health coverage for the uninsured.