TaxVox: Federal Budget and Economy

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Federal Budget and Economy

Sharing the Wealth—The Sequel

June 9, 2009 –
As I promised in last Friday’s TaxVox post, here is TPC’s estimate of the 2012 distribution of President Obama’s tax proposals in the 2009 budget, measured against the administration’s chosen baseline. That baseline looks a lot like current policy: extend the Bush tax cuts, index and make permanent the 2009 estate tax, and permanently patch the alternative minimum tax by indexing forward the 2009 parameters.
Federal Budget and Economy

Sharing the Wealth?

June 5, 2009 –
Following last month’s release of the Treasury Green Book, the Tax Policy Center reworked its distributional analysis of the tax proposals in President Obama’s 2010 budget. We learned many new details about specific tax provisions, including the practical definition of who has enough income to face higher taxes. The bottom line? You have to have a lot of income to be in Obama’s crosshairs.
Federal Budget and Economy

Baseline Redux: or When is a Tax Cut Not a Tax Cut?

June 3, 2009 –
Here we go again. I posted yesterday on a new TPC analysis of the tax cuts in President Obama’s proposed 2010 budget. The conclusion: Nearly everyone, even most of the very wealthy, would enjoy a big tax break. This, I suggested, was not smart, given the nation’s huge deficit and Obama’s ambitious priorities. Not surprisingly, a commenter—AMTbuff—called me to task. While many of these revenue provisions represent tax cuts relative to current law, they are not when compared to current policy—that is, assuming all the 2001 and 2003 tax cuts are made permanent, the AMT is patched into the future, etc. According to AMTbuff, “using current law as the baseline is misleading [since] neither the public nor any experts expect all tax rates to spring back to pre-2001 levels.”
Federal Budget and Economy

The Obama Tax Cuts: More Generous Than Ever

June 2, 2009 –
Everybody gets a tax cut! To look at TPC’s latest estimates of the tax provisions of President Obama’s 2010 budget, you’d think there was no deficit of $1.84 trillion, or that the White House has no need to pay for an ambitious health reform plan. Or more education spending. Or more infrastructure construction.
Federal Budget and Economy

Budgeting by Special Election

May 18, 2009 –
Californians vote tomorrow on six ballot measures addressing their state's perennial budget problems. If nothing passes, California will face a $20 billion budget shortfall. If everything passes, the deficit drops to—drum roll, please—$15 billion. Big numbers but not unusual for the Golden State. The bigger issue is whether California, or any other state, should budget by initiative.
Federal Budget and Economy

Tax Expenditures and Young Children

May 17, 2009 –
Taxes aren’t just for grown-ups. In fact, our new Urban/Brookings study estimates that 40 percent of all federal expenditures spent on infants and toddlers flows through the tax system. That’s more than $22.8 billion. The two main programs that drive this spending are the earned income tax credit (EITC) and the child tax credit (CTC). Although both allocate fairly large percentages (18%) of their total program expenditures to families with infants and toddlers, they differ dramatically in the benefits that are refundable and those that are not. The EITC is fully-refundable, so in 2007 (the most recent year of available data), almost 90 percent of benefits received by families with infants and toddlers ($7.1 billion) came as a tax refund. In contrast, only one third of the partially refundable CTC benefits ($2.8 billion) were refundable, so most of CTC’s benefits reduced tax liability but failed to put cash back into needy families’ hands.
Federal Budget and Economy

Medicare Part D and the Deficit

May 14, 2009 –
Medicare’s Part D drug benefit is going to cost taxpayers a lot of money. A really, really lot of money. You can find the story deep in the bowels of the Medicare Trustees report that was released earlier this week. It is a nice little case study of how a well-intentioned government program can add tens of billions of dollars annually to the federal deficit. And it is a cautionary tale of how hard it will be to bring medical costs under control, despite the promises of the Obama Administration and industry lobbyists.
Individual Taxes

Stimulating the Stimulus: Helping New Homebuyers

May 6, 2009 –
This year’s stimulus bill offers a refundable tax credit of up to $8,000 for new homebuyers, generously defined as anyone who hasn’t owned a principal residence during the past three years. That’s a pretty sweet deal that could help boost sagging real estate markets.
Federal Budget and Economy

Mañana Budgeting

April 30, 2009 –
President Obama said last night he was going to request $1.5 billion to help address the swine flu outbreak. I wish he had also promised to find the dough to pay for this initiative. But, he didn’t. This follows a troubling, and ongoing, pattern. Obama and the congressional Democrats say they recognize the consequences of burgeoning deficits and promise to address the problem—next time.
Federal Budget and Economy

Where’s My Stimulus?

April 27, 2009 –
It’s been more than two months since President Obama signed the American Recovery and Reinvestment Act (ARRA) into law, so where’s the money? Most workers saw a small boost in take-home pay earlier this month, thanks to withholding changes their employers made to implement the Making Work Pay tax credit. Many retirees have received their $250 piece of the stimulus pie. Some people who bought homes this year undoubtedly claimed the $8,000 first-time homebuyers credit on their 2008 tax returns. But most of us will have to wait until we file our 2009 returns next spring to get the rest of the tax bennies.