TaxVox: Campaigns, Proposals, and Reforms

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The voices of Tax Policy Center's researchers and staff

Federal Budget and Economy

Will Obama “Bend the Curve” on Entitlement Spending?

January 19, 2009 –
I am sure Barack Obama will deliver a stirring Inaugural address tomorrow. However, Obama’s most important remarks since his election came in an interview the other day with The Washington Post. There, he promised to convene a bipartisan fiscal summit in February. This has the potential to be the most important step of his Presidency. Yes, at least as important as fixing the immediate economic mess.
Federal Budget and Economy

Stimulus: Something for Everyone

January 15, 2009 –
The stimulus plan unveiled by House Democrats today includes a little something for everyone. With an eye-popping price tag of $825 billion, I suppose it should. The plan, written in close consultation with the incoming Obama Administration, includes $275 billion in business and individual tax cuts, and $550 billion in direct spending for everything from smart appliances to repairing hiking trails in national parks. A huge chunk—roughly half—would be direct assistance to state and local governments.
Individual Taxes

Top Destinations in 2009

January 14, 2009 –
Last week’s travel section of the New York Times lists the top 44 vacation destinations for 2009. Neither Bermuda nor the Cayman Islands were on the list. And it looks like neither will make the top destination list for the headquarters of U.S. multinational corporations. The “hot” tax haven this year is cool Switzerland. In the last few months, three large U.S. businesses that are currently chartered in Bermuda have announced that they are packing up and moving to Switzerland. Meanwhile, former hot spot, The Cayman Islands, seems to have lost its allure. Two U.S. companies incorporated there have announced headquarter moves to Switzerland and one plans to reincorporate in Ireland in 2009.
Federal Budget and Economy

Obama-nomics: Written on a Word Processor

January 13, 2009 –
Barack Obama is channeling Ronald Reagan. Not in policy (his proposed tax cuts are not that big) but in tactics. The question is: Can the president-elect convince Congress to spend well over $1 trillion without leaving any fingerprints. Having learned from Reagan’s legislative successes—notably the Tax Reform Act of 1986—and from Bill Clinton’s failures—see health reform—it appears Obama will never propose any specific economic stimulus legislation. Instead, he is merely sending Congress ideas, and leaving the dirty work of writing a proposal to the Hill. The New York Times Jackie Calmes did a nice post on this the other day.
Individual Taxes

More on the New Jobs Tax Credit

January 9, 2009 –
Good to see comments on the New Jobs Tax Credit from two authors of papers on the subject, Timothy J. Bartik of the Upjohn Institute and John H. Bishop of Cornell. In response to my criticism of Barack Obama’s call for an employer credit to encourage hiring, both argue that the Carter-era version of this idea—the 1977-78 New Jobs Tax Credit—succeeded in creating as many as 700,000 new jobs in the first year.
Federal Budget and Economy

Obama’s Loose Change

January 7, 2009 –
CBO says the deficit will reach $1.2 trillion this year. President-elect Obama says the red ink will continue to flow at this rate or faster “for years to come” unless policymakers “make a change in the way Washington does business.” Obama is right, of course. And his words echo the message he used so successfully throughout the campaign. Change, he promised, that you can believe in. The problem is that the stimulus bill Obama is preparing mimics exactly the sort of cynical business Washington has been doing for decades.
Federal Budget and Economy

Obama's $300 Billion Tax Cut: Lots of Buck, Not Much Bang

January 5, 2009 –
The soon-to-be Obama Administration floated quite a trial balloon over the weekend: $300 billion in tax cuts for workers and business over the next couple of years. When you get past the eye-popping number, perhaps the most striking element is how conventional most of the ideas are. For individuals, they’d include some version of Obama’s Making Work Pay Credit, a refundable tax credit (aka cash payment) for everyone making roughly $200,000 or less. Obama aides did not say how this money would be distributed, although they hinted they’d try something other than the rebates that the Bush White House turned to three times over the past eight years. One idea: reduced withholding, which would release the funds more slowly than a lump-sum payment would.
Individual Taxes

TaxVox’s Lump of Coal Award: The Ten Worst Ideas of 2008

January 2, 2009 –
It was quite a year. Taxpayers are now shareholders in most major U.S. banks, a massive insurance conglomerate, and three failing car companies. After years of debating whether the government was implicitly or explicitly guaranteeing Fannie Mae and Freddie Mac debt, Washington settled the argument by buying the mortgage giants. I know George Bush liked to talk about an ownership society, but I never imagined this is what he had in mind.
Federal Budget and Economy

Great Expectations

December 23, 2008 –
I’ve been reading up on the Great Depression (never say those of us at TPC don’t know how to have fun) and am struck by one overriding thought: Even with the benefit of 80 years of hindsight, economists still can’t agree on either what went wrong or how the economy got back on track. There is an important lesson here. Famously impatient, Americans not only expect government to fix today’s economic crisis, they demand it. Barack Obama, I suspect, will have about a year to turn things around before the public turns on him. Yet, if we still don’t know what happened in 1929, how can we expect policymakers to truly understand—and correctly address—events happening in real time today?
Individual Taxes

VATs Next?

December 16, 2008 –
Is it time for the U.S. to consider a Value Added Tax? More and more tax experts think so. But the politics isn’t yet getting easier. One problem: While more specialists are joining the VAT fan club, they can’t agree on what to do with the money. TPC’s Len Burman has proposed a VAT to supplement the income tax and pay for health care. Michael Graetz, once a top tax aide to the senior George Bush, would use one to get most Americans off the income tax. At the TPC/Tax Analysts tax reform conference on Dec. 5, Pam Olson, who was a top tax aide to the today’s President Bush, endorsed the levy as a way to buy down corporate tax rates. Once the tab comes in for the trillions of dollars Washington is spending to stimulate the economy and bail out the financial markets, I am certain others will propose a VAT simply to help pay the bills.