TaxVox: Campaigns, Proposals, and Reforms

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The voices of Tax Policy Center's researchers and staff

Federal Budget and Economy

Bank Bonus Taxes are a Bad Idea

December 14, 2009 –
The UK recently instituted a 50% tax on bankers' bonuses and France is reportedly about to follow suit. German chancellor, Angela Merkel, is said to like the idea, but would prefer to institute a tax on financial transactions. Even economist Paul Krugman said that, at first blush, the bonus tax "looks entirely reasonable." Sure, it might drive the best and the brightest out of the finance business, but that would be a good thing.
Individual Taxes

White House Tax Reform Report Delayed Until Next Year

November 30, 2009 –
The White House is delaying the report of its tax reform panel until “after the holidays.” According to a blog posting by top economic adviser Austan Goolsbee, the President's Economic Recovery Advisory Board is delaying the report so it can review new proposals for reform. However, the panel still plans to release only what board chairman Paul Volcker calls “an almanac” of reform ideas. It will not endorse specific proposals or make any recommendations. The report had been due on Friday.
Individual Taxes

Obama’s Non- Tax Reform Commission

November 10, 2009 –
In a month, if White House officials are to be believed, the Obama Administration will unveil the tax reform report of the President’s Economic Recovery Advisory Board. Despite once-high expectations, it is likely to be a waste of everyone’s time. The Board (the PERAB in Washington-speak) is hardly a bunch of economic lightweights. Chaired by ex-Federal Reserve Chairman Paul Volcker, its members include economist Marty Feldstein, GE CEO Jeff Immelt, venture capitalist John Doerr, former CEA chair Laura Tyson, and other stars of Wall Street, Main Street, academia, and labor. Its chief economist is Austan Goolsbee, a top-notch researcher who has had close ties to President Obama for years.
Individual Taxes

Paul Ryan’s Consumption Tax

October 29, 2009 –
Representative Paul Ryan (R-WI), one of Congress’ most interesting members, was the guest at this morning’s session of TPC’s Tax Reform 2.0 series. He came to talk about his Roadmap for America’s Future—a comprehensive plan for dramatically restructuring both entitlement spending and the tax code. Ryan is nothing if not ambitious.
Federal Budget and Economy

Whither Revenues?

October 19, 2009 –
Federal taxes in fiscal year 2009 claimed the smallest share of GDP since 1950—14.9 percent according to the Congressional Budget Office (see top figure). The revenue drop has many causes: tax reductions in this year’s economic stimulus, the collapse of the economy, and the Bush tax cuts from earlier in the decade.
Individual Taxes

The Roth Rollover Boondoggle

September 3, 2009 –
High-income investors are about to enjoy a massive tax windfall from Uncle Sam. In just a few months, they’ll be able to convert their Individual Retirement Accounts--where investment earnings are taxable at withdrawal-- to Roth IRAs-- where they are tax-free. As financial planners are happily telling their big-ticket clients, this will be the gift that keeps on giving.
Individual Taxes

Trillion Dollar Health Reform, $3 Trillion in Tax Cuts

August 26, 2009 –
It is interesting, and perhaps worth noting, that while political opposition seems to be hardening against the $1 trillion, ten-year cost of the early versions of health reform, barely a peep of concern has been raised about the $3 trillion price tag for President Obama’s plan to extend most of the Bush-era tax cuts.
Individual Taxes

Stuck in the Middle with our International Tax System

August 18, 2009 –
President Obama took aim at multinational corporations last May at a press conference on international tax policy. I’ll leave out the details here, lest I put you to sleep or explode your brain. Let’s just say that the current system is a mess that drastically needs fundamental reform. Economists describe two contrasting “pure” approaches to taxing the income U.S. companies earn abroad. A “worldwide” approach would apply our domestic tax rules to all income (with a foreign tax credit to protect against double-taxation). In theory, that system would tax U.S. business income the same, whether it’s earned at home or overseas, so firms shouldn’t care where they invest. In contrast, under a “territorial” or “dividend exemption” system, the U.S. wouldn’t tax active business income earned overseas; American firms would pay only the taxes of the country where they earn income, just like any non-U.S. business operating there. In theory, that puts U.S. businesses that invest abroad on equal tax footing with foreign firms.
Federal Budget and Economy

What about the Spending Side?

August 17, 2009 –
Rosanne Altshuler and I have argued in recent posts that Washington will be hard pressed to close our ongoing budget gap with politically palatable tax increases. (Is that an oxymoron?) Neither raising the individual income tax nor boosting corporate levies will erase the deficit. But what about the spending side of the budget? We at the Tax Policy Center naturally focus on taxes but we do understand that cutting a dollar of spending has pretty much the same effect on the deficit as raising another dollar in taxes.
Federal Budget and Economy

Why We Won’t Eliminate the Deficit with Corporate Tax Revenues

August 13, 2009 –
Yesterday my colleague Bob Williams blogged on how difficult it will be to dig ourselves out of our enormous budget hole. He examined CBO’s biennial Budget Options report, which contains a list of “revenue options” for modifying Federal taxes. Bob focused on the year with the smallest deficit over the ten year budget window which happens to be 2012. In that year, CBO predicts we will run a deficit of “only” $633 billion. The individual income tax raises the bulk of federal revenues, so naturally Bob looked at incremental reforms of those levies.