TaxVox: Individual Taxes

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The voices of Tax Policy Center's researchers and staff

Individual Taxes

The Wyden-Gregg Tax Reform: More Progressive and Roughly Revenue Neutral

May 24, 2010 –
The bipartisan tax reform proposal of senators Ron Wyden (D-OR) and Judd Gregg (R-NH) roughly breaks even (as the lawmakers intended) and makes the tax code somewhat more progressive, according to a new analysis by the Tax Policy Center. TPC analysts Jim Nunns and Jeff Rohaly estimate the Wyden-Gregg plan would raise about $22 billion through 2020 compared to TPC’s “current policy” baseline. That’s a tiny fraction of the $35 trillion Treasury is expected to collect over the decade. The reform plan—called the Bipartisan Tax Fairness and Simplification Act of 2010 (BTSFA or S. 3018)-- would lose a bit in the first few years, but generate slowly increasing amounts of new tax revenue after that.
Individual Taxes

An Estate Tax Deal: Pay Now, Die Later

May 19, 2010 –
News reports suggest that the Senate may soon consider restoring the estate tax with an option allowing people to prepay their tax before they die. Details are apparently still in flux as senators negotiate. We—and maybe they--don’t know yet what they’ll propose for the basic estate tax but it’s unlikely to be harsher than the 2009 version.
Federal Budget and Economy

The U.S. Is Not (Yet) Greece.

May 18, 2010 –
can’t resist jumping into the ongoing debate between New York Times economic columnists David Leonhardt and Paul Krugman. David worries that there are troubling similarities between the current Greek debt crisis and huge ongoing deficits in the U.S. “Nonsense,” replies Paul, who argues that the two nations have about as much in common as souvlaki and cheeseburgers. My take: The U.S. is not Greece. But this does not mean we cannot learn lessons from a nation that is marked by both great beauty and regular bouts of fiscal madness.
Individual Taxes

James Galbraith on Deficits: Dick Cheney of the Far Left

May 17, 2010 –
Ezra Klein interviewed James Galbraith, who argued quite forcefully that “the danger [posed by the long-term deficit] is zero. It’s not overstated. It’s completely misstated.” We now have an answer to the trivia question, “What do James Galbraith and Dick Cheney have in common?” Cheney famously said, “Reagan proved deficits don’t matter.”
Individual Taxes

Take the State Corporate Income Tax… Please!

May 14, 2010 –
In 1983, Ronald Reagan proposed eliminating the federal corporate income tax. Last week, Michael Boskin took up the charge. I have another idea: Get rid of the state corporate income tax. State corporate income taxes are lineal descendents of the federal version and share many of its flaws. They doubly tax income at the firm and individual level, penalize businesses that organize as corporations, and reward debt versus equity finance. They also are very sensitive to the business cycle, and tend to plunge when the economy sags.
Individual Taxes

Another Run at Taxing Carried Interest

May 13, 2010 –
TaxVox’s very first article—in October, 2007—was about congressional efforts to tax the compensation of hedge fund and private equity managers as ordinary income rather than capital gains. For three years now, the House has passed such a tax on this income, known as carried interest. And for three years the levy has died in the Senate.
Individual Taxes

The Senate Climate Bill Misses an Opportunity

May 13, 2010 –
Senators John Kerry (D-MA) and Joe Lieberman (I-CT) introduced a climate bill yesterday that, among other things, establishes a cap-and-trade program for greenhouse gases. The virtue of a cap-and-trade program is that it establishes a market price for a pollutant and allows flexibility within and across regulated entities in how to reduce emissions. But any cap-and-trade program must decide whether to allocate the pollution allowances for free or through a government auction, as well as how to distribute both the allowances and any auction revenue.
Individual Taxes

Feldstein Says Don’t Make the Bush Tax Cuts Permanent

May 12, 2010 –
In a move reminiscent of Richard Nixon’s visit to China, conservative economist Martin Feldstein argued in today’s Wall Street Journal that the Bush tax cuts should be extended for a year or two, but not made permanent.
Federal Budget and Economy

Taxing Bank Risk

May 11, 2010 –
Washington is buzzing with talk about taxing banks. And after watching the Goldman Sachs masters of the universe testify on Capitol Hill a couple of weeks ago, it is no surprise that many want to tax these people until they bleed. Unfortunately, punitive taxes are a bad idea, no matter how good they make us feel. But could a well-designed levy drive financial firms to allocate capital more efficiently? Maybe so, says Narayana Kocherlakota, the new president of the Federal Reserve Bank of Minneapolis.
Federal Budget and Economy

The Political Economy of Consumption: ‘Tis Better To Give, and Give, and Give

May 6, 2010 –
Here is why deficit reduction is so hard: Politicians get reelected by encouraging spending, not savings. Supporting policies that reduce current consumption—either by government or households--rarely gets anyone elected to anything. Not to stereotype, but nations do have personalities. Italians eat. Russians drink. Americans spend. And when anything—or anyone—gets between us and our consumption, watch out.