TaxVox: Campaigns, Proposals, and Reforms

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The voices of Tax Policy Center's researchers and staff

Individual Taxes

Tax Reform 2.0

March 26, 2009 –
President Obama announced yesterday that he has asked former Federal Reserve Chairman Paul Volcker to head a new tax reform panel that will make recommendations by December 4th. This is great news. The current tax system is a complicated mess and can’t produce the revenues we will need in the coming years. But there is no reason for Volcker to reinvent the wheel. His panel could start by looking at the work of a bipartisan tax reform panel established by President Bush in 2005. I may be biased, since I served as the staff’s chief economist, but I think we designed a pretty good blueprint.
Federal Budget and Economy

It’s True, Nearly Everybody Does Get a Tax Cut in the Obama Budget.

March 16, 2009 –
In the presidential campaign, Barack Obama promised he’d cut taxes for 95 percent of all Americans. And, so far at least, it looks like he’s coming close to meeting that goal. I think this sort of largess is a mistake given the nation’s long-run fiscal problems. But GOP claims that Obama is trying to raise taxes for many Americans are bogus. TPC has just completed a major analysis of the tax provisions of the President’s 2010 budget. We found that, compared to current law, 91 percent of taxpayers would get a tax cut under the Obama plan. That is, they’d pay less tax than they would if the Bush tax cuts expired as scheduled in 2010 and the Alternative Minimum Tax is allowed to bite millions more taxpayers.
Federal Budget and Economy

The Opacity of Hope

March 10, 2009 –
President Obama’s promise of transparency in government is a laudable goal after too many years of near-obsessive secrecy by the Executive Branch. Unfortunately, at least when it comes to his tax agenda, the president’s new budget falls far short of that vow. Too many tax proposals are written in Inside-the-Beltway code. For many provisions, there is no description at all in the 134-page budget. Most can be found only by deciphering the tables in the back. Some items worth hundreds of billions of dollars appear only as mere footnotes. Others are nothing more than numbers in revenue tables. There are no real proposals at all.
Federal Budget and Economy

The Obama Tax Plan: Winners and Losers

February 27, 2009 –
This won’t take long. If you are blue-collar wage earner, a low-income family with children, or a college student, you should love President Obama’s tax plan. On the other hand, if you are making more than $250,000, you may not be so happy: By 2011, you'd be paying a lot more tax than you've gotten used to over the past few years. To the surprise of absolutely nobody, Obama’s budget includes many of the tax changes he promised during the campaign. He’d make permanent many of the “temporary” tax cuts in the just-passed stimulus. Working families would continue to get an $800-a-year tax cut long after the recession ends, and they’d continue to enjoy the benefits of a more generous Earned Income Credit and a more refundable child credit. Obama is proposing tax reductions for low- and moderate-income families of almost $800 billion over the next decade.
Federal Budget and Economy

The Budget Summit: A Missed Opportunity

February 24, 2009 –
Whatever his intentions, President Obama’s missed an opportunity at his fiscal summit yesterday. It is critically important for Washington to finally confront the long-term deficit. And Obama sent an important symbolic message by throwing this shindig. But the timing was all wrong. Right now the public and financial markets are obsessed with only one economic issue: the recession. With those fears so dominant, whatever was said at the White House yesterday will be quickly forgotten.
Federal Budget and Economy

Tax Stimulus: It Could Have Been Worse

February 11, 2009 –
House-Senate conferees have just about wrapped up a compromise $789 billion stimulus plan that should land on President Obama’s desk by the weekend. While we do not yet have bill language or revenue estimates, published reports suggest that about one-third of the compromise measure is made up of tax cuts. For the most part, the final version of those tax breaks is worse than the initial House proposal. Most troublesome, this measure waters down two important proposals that would have gotten money into the economy rather quickly and instead adds a $70 billion Alternative Minimum Tax patch that will do little to boost spending—the goal of any good stimulus.
Federal Budget and Economy

Building a Trillion Dollar Bucket

February 5, 2009 –
I am beginning to understand why the stimulus plan is so bloated with stuff that is so obviously not stimulus. It was designed backwards. Congress and President Obama could have identified a list of those proposals that are both timely and targeted, figured out what they would cost, and assembled them into a stimulus measure. Instead, they are doing what Washington always does with big bills such as this: They first invented, out of whole cloth, a number for the size of the stimulus. Having capped the price at a roughly a trillion dollars, they are now horse trading to choose the individual tax cuts and spending to fit that pre-arranged cost target. As my colleague Bill Gale puts it, first they built the bucket, now they are trying to fill it.
Federal Budget and Economy

It is About Credit Markets, Not Just Stimulus

January 27, 2009 –
Washington has kicked off a perfectly predictable donnybrook over stimulus. Democrats, who spent the past eight years bashing George Bush for turning a Clinton-era surplus into a big deficit, are now defending what will be nearly $1 trillion in new tax cuts and spending. Republicans, who presided over decades of deficits, suddenly are worried about the debt we are leaving to our grandchildren.
Federal Budget and Economy

Grading the Stimulus

January 26, 2009 –
My TPC colleagues—most having taught at some point in their careers—couldn’t resist. They’ve given grades to the major tax provisions of the stimulus bill now working its way through Congress. While you can argue over the specific grades (and we surely did), the benefit of this exercise is that it forces you to look at the relative value of each of the elements of the plan. For a first pass, TPC graded the Ways & Means bill, and concluded that the best proposals of the bunch are those that give temporary tax relief to low-income families. It makes sense, since they are the most likely to spend the money they receive. As I noted in a recent post, even these are far from perfect, but they should help to get the struggling economy get back on its feet.
Individual Taxes

Will the Tax Cuts Help Fix the Economy?

January 22, 2009 –
How much will the $300 billion in tax cuts approved today by the House Ways & Means Committee really stimulate the economy? They will help some, but don’t expect them to accomplish a lot. I’d give the overall plan a Gentleman’s C. Some provisions would channel money to low-income people most likely to spend it, but deliver the cash too slowly. Others distribute the funds relatively quickly, but give an awful lot to wealthier taxpayers who are least likely to spend it.