TaxVox: Individual Taxes

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The voices of Tax Policy Center's researchers and staff

Campaigns, Proposals, and Reforms

Misrepresenting the Bush Tax Cuts, or the Return of Death Panels

August 23, 2010 –
The story goes that when Lyndon Johnson was losing his first congressional election he put out the word that his opponent was having sex with barnyard animals. An aide innocently warned Johnson that this wasn’t true. “Make the SOB deny it,” LBJ was said to have replied.
Federal Budget and Economy

Between a Fiscal Rock and a Hard Place

August 19, 2010 –
The Congressional Budget Office’s annual mid-session update provides some striking evidence of just how challenging today’s fiscal environment is. Because deficits were so high going into the economic slump, and because the financial crash was so steep, Washington must now navigate between two unacceptable outcomes: tight fiscal policy and slower growth now, or bigger deficits and slower growth later.
Campaigns, Proposals, and Reforms

Another View of the Bush Tax Cuts

August 17, 2010 –
Adam Looney at the Brookings Institution has a nice new paper on the Bush tax cuts. It can be summarized in this picture:
Individual Taxes

More on Individual Tax Rates and Small Businesses

August 13, 2010 –
Howard Gleckman discussed some of the facts and issues regarding the role of small businesses in the debate on the expiring 2001 and 2003 tax cuts. Eric Toder expressed a strange sense of déjà vu. While everyone agrees that changes in the top two marginal tax rates would affect only a small share of individuals who report business income on their tax returns, proponents of full extension point out that those high-income individuals receive a large fraction of net positive business income. (JCT has estimated that fraction at 50 percent; TPC’s estimate is closer to 45 percent.) But what is less well known is what that business income consists of. How much represents the income of the neighborhood grocer or the owner of a small manufacturing firm? And how much represents the income of highly-paid professionals who take their income in the form of partnership shares, such as partners in law firms, accounting firms, and Wall Street hedge funds?
Individual Taxes

There is Nothing New about Families Paying No Income Tax

August 10, 2010 –
Following the flap over our Tax Policy Center colleague Bob Williams’s calculation that close to half of all families did not pay income tax in 2009, we thought it would be instructive to take a look at history. It turns out that over the past five decades, there have been other periods when families with close to average incomes have been exempt from the income tax, and that their current exemption levels were due to both Republican and Democratic efforts to reduce taxes for moderate-income households and to find alternatives to welfare.
Individual Taxes

Déjà vu All Over Again

August 9, 2010 –
Howard Gleckman’s August 4 TaxVox post on tax increases and small business reminds me of the debate over the Clinton deficit reduction proposals in 1993. Then, as now, a new Democratic President proposed to raise tax rates on the highest individual income taxpayers. Then, as now, Republican opponents portrayed the proposal as a tax increase on small business that would kill jobs and stop the recovery. A June 24, 1993, Washington Post story by David Hilzenrath headlined, “Income Tax Hike Stirs a Debate on Jobs Impact; Administration Rejects Claims Small Business Would Be Hurt,” reported, “As the Senate began considering President Clinton's deficit-reduction plan yesterday, Republicans charged that the income tax increase he says is aimed at the rich would hit small businesses and jeopardize their growth.”
Individual Taxes

In Defense of Congressman Paul Ryan

August 6, 2010 –
Given that columnist Paul Krugman relied on Tax Policy Center estimates to level claims that Congressman Paul Ryan is a “flimflam man” and that Ryan’s plan to address our fiscal problems is a “fraud,” I think a defense of the Congressman is in order.
Campaigns, Proposals, and Reforms

The Bush Tax Cuts and Small Business: What We Know

August 4, 2010 –
Those who would extend all of the Bush tax cuts, including for the highest-earners, are zeroing in what would happen to small business if Congress lets those top tax rates rise. And they are not subtle. Allowing top rates to increase would be a “job-killing tax hike” says Senator Orrin Hatch (R-Utah).
Campaigns, Proposals, and Reforms

Extend the Bush Tax Cuts? It’s the Wrong Question

August 3, 2010 –
Washington is about to spend months trying to answer the wrong question. Instead of reprising their partisan, tiresome, and largely unproductive argument about what to do with the Bush tax cuts, President Obama and Congress ought to be asking a very different question: How do we build a tax system capable of generating the revenues we need to fund the government we want in the most efficient and fair way possible?
Campaigns, Proposals, and Reforms

Congress, the Bush Tax Cuts, and the Perils of Pauline

July 29, 2010 –
If you think this year’s battles over health care, stimulus, climate change, and financial regulation have been nasty, just wait ‘til Washington tackles the Bush tax cuts. Democratic leaders on Capitol Hill say they will consider the fate of those tax cuts--due to expire at year's end-- just before the congressional elections. That will set up a high-stakes brawl on a political and economic high-wire.