TaxVox: Individual Taxes

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The voices of Tax Policy Center's researchers and staff

Individual Taxes

Why The Heritage Foundation is Wrong About the CLASS Act

July 27, 2010 –
In a Washington Times column today, two Heritage Foundation researchers argue that the Community Living Assistance Services and Supports (CLASS) Act is a trillion dollar government bailout waiting to happen. The CLASS Act is a national voluntary long-term care insurance program that was included in the new health care law. And to listen to the authors, you’d think CLASS will make Fannie Mae look like a Salvation Army Christmas kettle.
Federal Budget and Economy

Starving the Beast or Free Lunch?

July 22, 2010 –
Senator John Kyl’s (R-AZ) recent insistance that tax cuts should “never” be offset with tax increases got me thinking about the governing philosophy behind this argument. In part, it is based on the idea that tax cuts are always good for the economy while tax increases are always bad. I’ll leave that one for another day, and instead focus on a second premise: The best way to cut government spending is to cut revenues.
Individual Taxes

Marty Feldstein is (Mostly) Right About Tax Expenditures

July 20, 2010 –
Kudos to Marty Feldstein, who this morning called for scaling back tax expenditures. These are highly-targeted tax breaks that are often little more than spending programs in mufti. Lawmakers of both parties love them, which is why they will reduce federal revenues this year by nearly $1 trillion, equal to almost the entire federal deficit.
Individual Taxes

Philanthropy and the Estate Tax

July 19, 2010 –
When President Obama proposed to cap the value of itemized deductions at 28 percent, the philanthropic sector came out foursquare against the idea, claiming that it would decimate charitable contributions. Cutting the tax savings from gifts to charities for high-income taxpayers would raise the after-tax cost of giving and lead people to give less. For taxpayers in the 35 percent top tax bracket, the cost of giving away a dollar would jump 10 percent from 65 cents to 72 cents (ignoring any state tax savings). That would lead to perhaps a 2 percent drop in giving—about $9 billion. (Len Burman explained the math in TaxVox last year.)
Campaigns, Proposals, and Reforms

Extending the Bush Tax Cuts

July 16, 2010 –
What should Congress do about the Bush tax cuts that are set to expire at the end of the year? That question is going to absorb much of Washington’s attention through the fall and—if present hyper-partisan trends continue—perhaps even beyond. On Wednesday, the Senate Finance Committee kicked off the coming drama by bringing in a group of tax experts to set the stage.
Individual Taxes

Raising the Social Security Retirement Age

July 15, 2010 –
If Social Security reform is political dynamite, the battle over whether to raise the retirement age may be the fuse. I got a hint of the passion behind this issue at an Urban Institute panel I moderated yesterday on Capitol Hill. In recent weeks, both Steny Hoyer (D-MD), who is the number #2 House Democrat, and John Boehner (R-OH), the top House Republican, have put the idea on the table. Ah, you say, there is finally bipartisan support for something in Washington. Not so fast. Both are far out on a legislative limb with little public support from fellow lawmakers.
Individual Taxes

In Life, Baseball and the Estate Tax, Timing is Everything

July 14, 2010 –
I came of age as a Royals fan, and I agree with George Brett’s comments at his Hall of Fame induction ceremony, “I don’t like those Yankees still”. George Steinbrenner’s Yankees tortured my beloved Royals in the late 1970s and early 1980s. I’ll never forget my dad flipping across news channels so my family could watch Brett tear out of the dugout over and over after umpires nullified his home run because Steinbrenner’s Yankees objected to the amount of pine tar on his bat. Ridiculous.
Federal Budget and Economy

We Can’t Always Get What We Want: Why Governing Americans is So Hard

July 13, 2010 –
The conventional wisdom is that Americans are fed up with their government. But our demands on policymakers are so inconsistent and irrational that we make governing nearly impossible. We hate big deficits, but oppose the actual tax increases or spending cuts that we need to dam the flood of the red ink. We are furious that government passed an $800 billion stimulus last year, but feel lawmakers are not doing enough to get the economy going. We want government to “do something” about the gulf oil spill but reject government interference in private business.
Individual Taxes

Doing the Roth Roll: The Quiet Explosion in IRA Conversions

July 8, 2010 –
Back in 2005, Congress gave many high-income savers a great gift, with the proviso that they couldn’t unwrap the package until this year. The bequest allowed the affluent to convert their traditional tax-deferred Individual Retirement Accounts into tax-free Roth IRAs. Now that these lucky investors have torn open the box, we’re beginning to learn what this opportunity will mean both for them and for federal revenues.
Federal Budget and Economy

Why Taxes Are Going Up

July 7, 2010 –
It’s hard to imagine that spending restraint alone can solve America’s long-run fiscal woes. Facing an aging population and rising health care costs, the federal government will continue to expand even if policymakers take serious steps to trim spending. That’s why policy wonks are working so hard to evaluate ways to raise more revenue. Cutting back on loopholes and other tax expenditures, taxing carbon emissions, introducing a value-added tax – all of these deserve attention in case America decides that it wants to finance a substantially larger federal government.