TaxVox: Individual Taxes

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The voices of Tax Policy Center's researchers and staff

Individual Taxes

Boring Report Prompts Sensational Claims on Corporate Tax Avoidance

August 20, 2008 –
The Government Accountability Office last week released a report with the scintillating title: "Comparison of the Reported Tax Liabilities of Foreign- and U.S.-Controlled Corporations, 1998-2005." Summarizing, GAO stated that in 2005 Foreign Controlled Domestic Corporations (FCDCs) reported a lower ratio of tax liabilities to gross receipts and total assets than did U.S.-Controlled Domestic Corporations (USCCs). At play could be abusive transfer pricing transactions. But, GAO also pointed out, FCDCs and USCCs differ by age, size, and industry composition and the agency "did not attempt to determine the extent to which these factors and others, such as transfer pricing abuse, explain differences in tax liabilities."
Campaigns, Proposals, and Reforms

Baseline Confusion

August 19, 2008 –
When the Tax Policy Center reported last month that Senators Obama's and McCain's tax proposals would both reduce federal revenues by trillions of dollars over the coming decade, both campaigns complained that TPC was using the wrong baseline to measure revenue changes. Instead of measuring revenue against current law, they asserted, analysts should assess the plans against "current policy." In fact, the choice of baselines is in some sense irrelevant as a gauge of our fiscal problems.
Individual Taxes

Trapped by the AMT

August 15, 2008 –
Len Burman of the Tax Policy Center and other tax experts frequently bemoan the horrendous complexity of the AMT and its potential to trap unwary taxpayers. But until now, we have not had data on how many taxpayer errors the AMT causes.
Individual Taxes

Obama's Empty Social Security Fix

August 14, 2008 –
The thing about a donut hole is that it is empty. There is nothing. And that, it seems, is what is left of Barack Obama's plan to fix Social Security. The Obama people now tell us that his proposal, which is built on a tax hike for those earning more than $250,000, won't take effect until at least 2018. You heard right: 2018.
Federal Budget and Economy

Obama and Holtz-Eakin II: Or How Will a New President Lower Expectations?

August 12, 2008 –
After I posted a tongue-in-cheek suggestion that, if he is elected president, Barack Obama should hire Doug Holz-Eakin to be his budget director, self-styled progressives have gone nuts. The Obamaites are up-in-arms because Holtz-Eakin happens to be John McCain's chief economic adviser. Could I have struck a nerve?
Federal Budget and Economy

Holtz-Eakin Should Be OMB Director -- For Obama

August 7, 2008 –
If Barack Obama gets elected President, the first thing he should do is hire Doug Holtz-Eakin to be his budget director. A highly-respected non-partisan budget wonk, who is leaning Obama’s way in the election, threw out this seemingly crazy idea at lunch the other day. And the more I thought about it, the more sense it made.
Individual Taxes

Great Marketing, But Is It Good Tax Policy?

August 5, 2008 –
Unlike other credits, the new one is really a 15 year interest-free loan. Qualifying buyers will get a refundable credit of the smaller of 10 percent of their purchase price or $7,500 for homes bought between April 2008 and June 30, 2009. Because they don’t get the credit until they file a tax return—and not when they buy the house—it’s unclear how much the cash windfall will help with down payments—which presumably was the whole idea. And interest-free doesn’t mean free: they must pay the money back to the government over 15 years.
Campaigns, Proposals, and Reforms

In Defense of the Blue Dogs

July 31, 2008 –
Liberal bloggers have taken to ganging up on the Blue Dogs—conservative Democrats who tend to go their own way on fiscal and foreign policy issues. Smelling victory in November, some on the left would like to find a way to take out these lawmakers, who mostly represent southern and midwestern swing districts.
Individual Taxes

Don't Read My Lips

July 30, 2008 –
For a brief 48 hours, it looked as if John McCain was courageous enough to say something sensible about tax policy—and as a result was immediately attacked by both the right and the left. Today’s Wall Street Journal reported disapprovingly that McCain would consider payroll taxes as a way to bolster Social Security’s finances.“Mr. Stephanopoulos [on ABC’s This Week] pressed, ‘So that means payroll tax increases are on the table, as well?’ Here came the words that have caused the McCain campaign well deserved grief: ‘There is nothing that's off the table. I have my positions, and I'll articulate them. But nothing's off the table.’”
Federal Budget and Economy

The Bush Deficit: "This is Going to be a Challenge"

July 29, 2008 –
To paraphrase the oily Captain Renault of Casablanca fame, we in Washington are shocked, shocked to find that deficits are going on here. To listen to the cries of outrage and dismay, one might think the Bush Administration’s latest projection of nearly $400 billion in red ink for the fiscal year ending on Sept. 30, and almost $500 billion for next year was unexpected.