TaxVox

The voices of Tax Policy Center's researchers and staff

Individual Taxes

Should Government Policies Favor Owners Over Renters?

November 19, 2009 –
Increasingly generous tax subsidies for homeowners are doing little to help the housing market. The U.S. Census Bureau reported yesterday that housing starts for October were down 10.6 percent from the previous month to a seasonally adjusted annual rate of 529,000. After rebounding from a historical low of 479,000 in April, starts have largely moved sideways and reflect a still-anemic housing market.
Individual Taxes

Making Work Pay Too Much

November 18, 2009 –
The Treasury Inspector General for Tax Administration reports that more than 15 million people could owe more income tax than usual next April, thanks to the 2009 stimulus act’s Making Work Pay credit (MWP). New withholding tables accommodating the credit are overly generous to people who work multiple jobs, pension recipients, and two-earner couples. For them, withheld taxes will drop more than the credit will cut what they owe the IRS.
Individual Taxes

Paying for Health Reform With the Medicare Payroll Tax

November 17, 2009 –
In the ongoing search for money to pay for health reform, Senate Majority Leader Harry Reid (D-Nev.) reportedly wants to raise the Medicare payroll tax rate for high earners. It is not the best way to generate revenue, but it is not the worst either.
Individual Taxes

California Dreams vs. Reality

November 13, 2009 –
Last week in my Public Financial Management class, I was explaining the time value of money and why lenders charge borrowers interest. A student asked “Isn’t the state of California increasing the amount of money they withhold from people’s paychecks, and isn’t that like an interest-free loan from taxpayers?” Ah, yes, it would seem that once again my home state had provided a case study in budget dysfunction.
Individual Taxes

Government Subsidies for Newspapers: Say It Ain’t So.

November 12, 2009 –
It has become fashionable for high-profile establishment journalists to call for government subsidies to save the newspaper business. It is a terrible idea. In a 100-page paper commissioned by The Columbia Graduate School of Journalism, former Washington Post executive editor Len Downie and J-school professor Michael Schudson argue for a package of government aid for newspapers, including both tax breaks and direct subsidies.
Individual Taxes

Winners and Losers in the Proposed Two-Tiered System of Health Subsidies

November 10, 2009 –
To try to save money on health reform, reformers have proposed to create a two-tiered system of subsidies. Those who remain with employer-provided health insurance would largely be left in the existing system, while others would have access to a new subsidy.
Individual Taxes

Obama’s Non- Tax Reform Commission

November 10, 2009 –
In a month, if White House officials are to be believed, the Obama Administration will unveil the tax reform report of the President’s Economic Recovery Advisory Board. Despite once-high expectations, it is likely to be a waste of everyone’s time. The Board (the PERAB in Washington-speak) is hardly a bunch of economic lightweights. Chaired by ex-Federal Reserve Chairman Paul Volcker, its members include economist Marty Feldstein, GE CEO Jeff Immelt, venture capitalist John Doerr, former CEA chair Laura Tyson, and other stars of Wall Street, Main Street, academia, and labor. Its chief economist is Austan Goolsbee, a top-notch researcher who has had close ties to President Obama for years.
Individual Taxes

Tax Credits for All

November 5, 2009 –
Contrary to all the advice TaxVox offered, the Senate last night voted to extend the Homebuyer’s Tax Credit for seven months and expand it to include many people who already own homes. The House will likely follow suit today.
Individual Taxes

Will Tax Credits Sell Long-Term Care Insurance?

November 3, 2009 –
Long-term care insurance has been a model of market failure. The need for care in frail old age or disability seems to be the ideal insurable event. Two-thirds of those over 65 will need some assistance before they die and 20 percent will need it for more than five years. Yet only about 6 million people own this insurance, and few seem interested in buying.
Individual Taxes

Taxing Private Ryan

November 2, 2009 –
My colleague Howard Gleckman has summarized the tax plan that Congressman Paul Ryan (R-WI) presented at the Tax Policy Center on October 29. He describes it as a consumption tax, but that’s not what it is. It is actually mostly a tax on wage income that would treat those who work for a living very differently from those living off the income from inherited wealth.