TaxVox: Individual Taxes

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The voices of Tax Policy Center's researchers and staff

Individual Taxes

In Summary: A Comparison of the Candidates’ Tax Plans

November 3, 2008 –
With the election a day away, today seems to be the appropriate time to summarize the differences in the candidates’ plans. The main differences are two: first, McCain proposes much larger tax cuts than Obama; and second, Obama’s plan tends to favor low- and middle-income taxpayers while McCain’s plan is more beneficial to those with higher incomes.
Campaigns, Proposals, and Reforms

Calculate Emptor

October 30, 2008 –
Have you seen the new tax calculators produced by the Obama and McCain campaigns? The idea is simple enough—make tax real for ordinary voters. Instead of talking about trillions of dollars or 95 percent of working families, describe what an Obama or McCain presidency would mean for real taxpayers.
Individual Taxes

Something to Agree On

October 30, 2008 –
With the candidates attacking each other's tax platforms, agreement over even tax policy basics seems elusive. But there is an exception. Both candidates want to encourage workers to save more through the Auto IRA. The essence of the Auto IRA is to make retirement saving automatic. It would mandate that employers deposit a portion of each paycheck of the 75 million workers without employer pensions into an individual retirement account administered by a private financial institution. Workers could opt out of the program, but the default option — if the worker does nothing— would place the employee on a path to better retirement saving.
Campaigns, Proposals, and Reforms

A New Stimulus Plan: Keep the Campaign Going

October 28, 2008 –
Let's face it, in our slumping economy, there is only one growth industry left: Political campaigns. Well, maybe two, if you count bankruptcy lawyers, but we'll worry about them another time. Think of it, while consumption on everything from autos to sofas has slowed to a trickle, campaign spending is booming. Candidates this year have raised—and are likely to spend—in excess of $5 billion. Barack Obama alone may spend something approaching $1 billion.
Federal Budget and Economy

Does Divided Government Guarantee Fiscal Responsibility?

October 27, 2008 –
The ordinarily very astute EconomistMom blithely asserted that there is "a lot of historical evidence suggesting that one-party government tends toward fiscal irresponsibility." Maybe not. Some time ago, I asked Urban Institute RA, Sonya Hoo, to review the evidence from states, over time, and across countries. She found the evidence of such an effect to be quite ambiguous.
Campaigns, Proposals, and Reforms

Senator McCain’s Universal Health Insurance Proposal?

October 27, 2008 –
When TPC analyzed Senator McCain’s proposal to replace the income tax exclusion for employer-sponsored health insurance with flat refundable tax credits of $2,500 for single coverage and $5,000 for family coverage, we found only modest net effects on coverage. Our model predicted that more than 21 million people would gain insurance coverage in the individual nongroup market by 2013 while 16 million would lose employer-based coverage. Despite a $1.3 trillion price tag over the next decade, the proposal would yield only modest and temporary gains.
Campaigns, Proposals, and Reforms

Share the wealth

October 23, 2008 –
A few more thoughts on "Barack the wealth spreader," as Sarah Palin now describes the Democratic nominee. I'm inspired in part by commenter D.F., who wrote this morning, "Tax rebates don't work. We need a flat tax." First off, John McCain is right when he says Obama's tax plan is redistributionist, if by that he means his rival would give his biggest tax cuts to the lowest earners. TPC calculates that Obama would cut the average tax rate for the lowest 20 percent of earners by more than 5 percent while he'd raise the rate by a roughly equal amount for the top 1 percent.
Campaigns, Proposals, and Reforms

Refundable Tax Credits=Socialism?

October 21, 2008 –
John McCain says Barack Obama’s enthusiasm for refundable tax credits amounts to socialism. Wow. This is interesting for so many reasons. To start, the mother of all refundable credits is the Earned Income Credit, which is the largest poverty program in the U.S. and distributes $42 billion to more than 20 million low-income families. It was enacted during the Presidency of well-known leftist Gerald Ford, and has been expanded repeatedly ever since, most recently by President Bush in 2001.
Campaigns, Proposals, and Reforms

Joe the Plumber, Small Business, and a Good Question

October 20, 2008 –
A commenter has asked an interesting question about the relationship between small business income and the number of workers in these firms. The FactCheck.org item Len Burman and Eric Toder cited in their blog post this morning reports that 20 million small businesses—many sidelines businesses or hobbies—;have no employees at all besides the proprietor. But it would be good to learn more about the rest. We’d like to hear from any of you who have other data or thoughts about this question.
Campaigns, Proposals, and Reforms

Joe the Plumber, Obama’s Tax Proposals, and Small Businesses

October 20, 2008 –
Poor Joe the Plumber has become a political metaphor: something no one ever wants to be. As we all know by now, based on his actual (rather than aspirational) income of $40,000, Joe would get a slightly bigger tax cut under President Obama than President McCain. But in one sense, even though the real Joe doesn’t own a business, most small business owners, like Joe, also have very modest incomes. Based on a sample of individual income tax returns, TPC finds that among tax units that receive most of their income from their own business, a partnership or a farm (reported on schedules C, E, or F), more than half have income below $30,000 and 80 percent make less than $100,000. (Table T07-0206)