TaxVox: Campaigns, Proposals, and Reforms

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The voices of Tax Policy Center's researchers and staff

Federal Budget and Economy

How We Won’t Eliminate the Deficit

August 12, 2009 –
Last week the Congressional Budget Office issued a new edition of Budget Options, its biennial publication detailing hundreds of proposals that would raise or lower taxes and spending. Numbers in the revenue chapter of the nearly-300-page book show just how difficult it will be to raise the taxes needed to fill the huge deficit hole that we’ve dug for ourselves.
Individual Taxes

The HAPPY Act

August 7, 2009 –
Representative Thaddeus McCotter, a fourth-term Republican from Livonia MI, has introduced the HAPPY Act—the Humanity and Pets Partnered Through the Years Act. It is HR 3501, and it was introduced on July 31. You could look it up. The HAPPY Act would allow taxpayers to deduct up to $3,500-a-year in pet care expenses, including vet care. The federal deficit so far this year is $1.268 trillion.
Campaigns, Proposals, and Reforms

The Wall St. Journal Editorial Page: Done In by the Facts Again

August 4, 2009 –
What would I do without The Wall Street Journal editorial page? I come to work on a slow summer’s day, not sure what I’m going to blog about, when I find this in the morning Journal: “A piece in The New York Times over the weekend declared in a headline that ‘the Rich Can’t Pay for Everything, Analysts Say.’ And it quoted Leonard Burman, a veteran of the Clinton Treasury who now runs the Brookings Tax Policy Center, as saying that ‘This idea that everything new that government provides ought to be paid for by the top 5%, that’s a basically unstable way of governing.’ They’re right, but where were they during the campaign?”
Federal Budget and Economy

Loose Handcuffs

July 30, 2009 –
Way back in the last century, PAYGO rules in the 1990 Budget Enforcement Act (BEA) helped control spending and contributed significantly to four years of budget surplus. Since BEA expired after 2002, looser PAYGO rules have applied and Congress has repeatedly chosen to ignore them. That was easy since violating PAYGO could only trigger a point of order, which was pretty easy to overcome, at least in the House. The Senate requires 60 votes to beat back a point of order but senators got around that by putting tax cuts and spending increases in budget resolutions, which are not subject to points of order.
Individual Taxes

Presidential Movement

July 28, 2009 –
As Congress and the administration grope their way toward healthcare reform, a major obstacle is financing: how do we pay the $1 trillion cost over the next decade? Many economists and members of Congress favor reducing or eliminating the tax exclusion of premiums paid for employment-based health insurance (ESI). We owe no income or payroll tax on the premiums our employers pay. The exclusion will cut an estimated $240 billion from federal revenues next year and $3.5 trillion over ten years. And it hits state tax collections too.
Individual Taxes

Taxing the Rich

July 13, 2009 –
A few thoughts on the House Democrats’ still-evolving plan to pay for close to half of health reform by raising marginal rates on the highest earning taxpayers: *By allowing the Bush tax cuts to expire, restoring the phase-outs of the personal exemption (PEP) and itemized deductions (Pease), and now by proposing a ‘surcharge” of 2 percent or more, Democrats would be boosting the top individual tax rate from the Bush-era 35 percent to nearly 45 percent, ever-closer to the 50 percent top rate of 1985.
Federal Budget and Economy

Another stimulus? Say it Ain’t So.

July 9, 2009 –
Congressional Democrats, having apparently lost patience with the first Obama stimulus, are beating the drum for yet another round of government money to pump up the still-lagging economy. They need to take a deep breath. Lori Montgomery wrote a nice piece in yesterday’s Washington Post explaining why. Using some data from Mark Zandi at Economy.com, Lori reports that barely $100 billion of last winter’s nearly $800 billion stimulus has made its way into the economy. Until the rest is spent, why would we want to run up the debt by hundreds of billions more?
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.”