RECENT ANALYSES OF THE ADMINISTRATION'S TAX AND BUDGET PROPOSALS
Listed below are recent Center analyses on various aspects of the Bush Administration's tax and budget proposals, along with a brief description of each analysis.  

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Examining Recent Analyses of Tax and Budget Issues

General Overview

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How Much of The Surplus Remains after The Tax Cut?
by Richard Kogan, Robert Greenstein, and Joel Friedman
June 13, 2001

The tax cut recently signed by the President consumes virtually all of the available surplus over the next ten years, leaving no room for additional tax cuts or large defense increases unless the tax cut is scaled back or funds are taken from the Social Security and Medicare Hospital Insurance surpluses.

Pathbreaking CBO Study Shows Dramatic Increases in Both 1980s and 1990s in Income Gaps Between the Very Wealthy and Other Americans
by Isaac Shapiro, Robert Greenstein, and Wendell Primus
May 31, 2001

Between 1979 and 1997, after-tax income grew an average of 157 percent for the top one percent of the population, compared to a 10 percent gain for Americans in the middle of the income spectrum and no gain for the bottom fifth of Americans, according to a new Congressional Budget Office study. The study also shows a decline in federal tax burdens for all income groups.

Following the Money: The Administration's Budget Priorities
by Robert Greenstein
April 4, 2001

This analysis shows that the President's tax cut would consume virtually all of the available surplus and thus would leave few resources for other needs, including those (such as education) the President has identified as priorities.

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Overview Assessment of President Bush's Tax Proposal
by Isaac Shapiro and Robert Greenstein
February 15, 2001

This analysis finds that the benefits of the Bush tax plan are heavily skewed toward those at the top of the income spectrum and explains how the tax cut could consume all — or more than all — of the available surplus.

Testimony of Robert Greenstein, Executive Director of the Center on Budget and Policy Priorities, before the House Committee on Ways and Means
February 13, 2001

Robert Greenstein explains that the Bush tax plan would likely absorb the entire projected non-Social Security surplus that is likely to be available. He also explains that the tax cut would concentrate an unusually large share of its benefits on those on the upper rungs of the income ladder.

 Taxes on Middle-Income Families Are Declining
by Iris Lav and Joel Friedman
January 10, 2001

This analysis, based on data from the Congressional Budget Office and the Joint Committee on Taxation, finds that taxes on middle-income families have fallen over the past few years.

Size Of The Tax Cuts and Their Affordability

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Final Tax Bill Ultimately Costs As Much As Bush Plan
by Joel Friedman, Richard Kogan, and Robert Greenstein
May 26, 2001

The final tax bill includes gimmicks that mask its true cost, which is estimated to exceed $4 trillion in the second decade, making it essentially the same size as the original Bush tax cuts.

Senate Finance Proposal Masks Full Cost
by Richard Kogan, Joel Friedman, and Robert Greenstein
May 14, 2001

The tax bill under consideration by the Senate Finance Committee uses a variety of devices to disguise its true cost; in fact, it would cost almost as much as President Bush's proposal when they each take full effect.

Will Congressional Tax-Writers Evade the Budget Resolution Limit on Tax Cuts?
by Joel Friedman, Richard Kogan, and Robert Greenstein
May 9, 2001

This analysis explains the risk that in order to fit the President’s tax package within Congress’ somewhat smaller limit, Congressional tax-writing committees might employ gimmicks that would increase the tax cuts’ ultimate costs.

Reduction of Top Rate Costs $237 Billion over Ten Years, Even Though Fewer than 1% of Filers Are in the Top Bracket
by Joel Friedman and Robert Greenstein
May 3, 2001

This report examines new estimates from the Joint Committee on Taxation showing the reduction in the 39.6 percent marginal tax rate contained in H.R. 3 and the President’s tax plan would cost $237 billion over ten years, even though fewer than one percent of all tax filers are in this tax bracket.

The Bush Tax Cut Is Now about the Same Size as the Reagan Tax Cuts
by Peter R. Orszag
April 19, 2001

This report shows that new Joint Tax Committee estimates on the cost of repealing the estate tax, as well as changes the House of Representatives has made in the Bush tax cut, have raised the tax cut’s cost. When fully in effect, it is now about the same size (as a share of the economy) as the Reagan tax cuts.

Cost of Tax Cut Would More Than Double to $5 Trillion in Second Ten Years
by Richard Kogan, Joel Friedman, and Robert Greenstein
April 4, 2001

This analysis explains that the Administration's tax cuts, in the form the House is passing them, would more than double in cost (to approximately $5 trillion) for the 2012-2021 period — a time when the costs associated with the baby boom generation's retirement will be increasing.

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House Ways and Means Action to Date Adds $300 Billion to Cost of Administration's Tax Cuts
by Joel Friedman, Richard Kogan, and James Sly
March 23, 2001

This report finds that the two pieces of the Administration's tax package that have been approved to date by the House will cost nearly $300 billion more than the Administration's budget shows.

New Joint Tax Committee Estimates Raise Cost of Bush Tax Plan: Cost Now Well Over $2 Trillion
by Richard Kogan and Robert Greenstein
March 6, 2001

This report finds that the cost of the Administration tax plan's income tax rate reductions exceeds the cost listed in the Administration's budget, and that the rate reductions in the Bush plan would cause about one of every three taxpayers to be subject to the Alternative Minimum Tax by 2011.

What the New CBO Projections Mean: Can the New Surplus Projections Accommodate a Large Tax Cut?
by Robert Greenstein and Richard Kogan
January 31, 2001

This report suggests that the amount of the ten-year surplus actually available for policy initiatives such as tax cuts is about $2.0 trillion, while the Bush tax cut is between $2.1 trillion and $2.5 trillion over the same period.

 
Effect of the Tax Cut on Different Groups

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Under Conference Agreement, Dollar Gains for Top One Percent Essentially the Same as Under House and Bush Packages
by Isaac Shapiro, Robert Greenstein, and James Sly
May 26, 2001

This piece analyzes the distribution of the conference tax agreement in comparison to the Bush plan and the House and Senate packages.

Low-Income Families with a Full-Time Working Parent Would Fare Much Better Under Senate than House Child Credit Provision
May 22, 2001

Six times as many low-income families with a full-time working parent would fail to benefit from the House version of the child tax credit expansion as would fail to benefit from the Senate version.

Nearly One of Every Four Children Would Fare Better Under Senate Than House Child Credit Provision
by Allen Dupree and Wendell Primus
May 22, 2001

Especially among children in Hispanic and black working families, the child tax credit provision in the Senate tax bill would be more beneficial than the provision in the House tax bill. State-by-state data are included.

Who Would Benefit from the Tax Proposal Before the Senate?
by Isaac Shapiro and Robert Greenstein
Revised May 21, 2001

The tax proposal before the Senate Finance Committee would predominantly benefit very-high-income taxpayers and thus would cause income disparities, which are at record levels for recent decades, to widen further.

Estate Tax Repeal and the Top Income Tax Rate Cut: A State-by-State Look at Who Would Benefit
by Iris Lav
May 14, 2001

Very few Americans would benefit from the proposals to repeal (rather than reform) the estate tax and to reduce substantially the top marginal income tax rate.

New Treasury Press Release Inflates Impact of Lowering Top Tax Rate on Small Business Owners
by Robert Greenstein and Isaac Shapiro
May 9, 2001

As this report explains, a May 7 Treasury Department press release greatly exaggerates the number of small business owners that would benefit from a reduction in the top marginal tax rate, in part because it uses a misleading definition of a small business owner.

Even If the 39.6 Percent Rate Is Unchanged, Taxpayers in the Top Bracket Would Receive a Tax Cut of More Than $10,000 from Other Rate Changes
by Isaac Shapiro
May 8, 2001

This report explains that taxpayers in the highest tax bracket have significant parts of their income taxed at rates below the top marginal rate and thus would enjoy a much larger tax cut under the Administration's tax package than middle-class taxpayers, even if the top marginal rate were to remain unchanged.

Reducing the Top Tax Rates: How Much Benefit to Small Business?
by Isaac Shapiro and Robert Greenstein
May 3, 2001

This brief analysis finds that many more small business owners would receive no tax reduction whatsoever from the Administration’s tax plan than would benefit from the plan’s reduction in the top marginal tax rate.

The Provisions in the House Tax Bill for Married Couples
by James Sly and Isaac Shapiro
April 5, 2001

This brief analysis of a bill (approved by the House on March 29) that provides tax cuts for married couples and expands the child tax credit explains that the lion's share of its benefits go to higher-income taxpayers.

How the House Bill to Expand the Child Tax Credit and Reduce Taxes for Married Couples Would Affect Lower-Income Families
by Robert Greenstein and Isaac Shapiro
April 5, 2001

This analysis of proposals approved by the House on March 29 regarding marriage-penalty relief and the child tax credit concludes that while they represent a step forward from the Bush proposal, much more is needed to provide relief to low-income families.

About One Percent of Small Business Owners Pay 39.6 Percent Tax Rate
by Isaac Shapiro and Robert Greenstein
March 28, 2001

This brief report responds to Administration statements that are likely to create the misleading impression that a large proportion of small business owners would benefit from the provision of the President's tax plan that reduces the top marginal tax rate.

Income Tax Rates and High-Income Taxpayers: How Strong Is the Case for Major Rate Reductions?
by Isaac Shapiro and Joel Friedman
March 16, 2001

This analysis finds that the Administration's tax proposal (as well as the tax-cut bill the House of Representatives is considering) would exacerbate the ongoing trend of widening income disparities by devoting a disproportionate share of its benefits to high-income taxpayers.

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New Treasury Distributional Table Departs Sharply from Previous Treasury Methodology
by Isaac Shapiro
March 9, 2001

This analysis of a Treasury Department table assessing the effects of the President's tax proposal on different income categories explains that the table understates the gains to the highest-income taxpayers and overstates the gains to the rest.

Bush Tax Cut and House Rate Cuts Widen Record After-Tax Income Disparities
by Isaac Shapiro and James Sly
March 7, 2001

This report finds that the President's proposed reduction in individual income tax rates and the tax-cut bill recently passed by the House Ways and Means Committee would significantly widen after-tax income disparities between the top one percent and the rest of the population.

In Many States, One-Third to One-Half of Families Would Not Benefit from Bush Tax Plan
by Nick Johnson, Allen Dupree, and Isaac Shapiro
March 6, 2001

This analysis estimates, on a state-by-state basis, the number of families and children who would receive no tax relief from the Bush plan because these families owe no federal income taxes; the large majority of these families work and pay payroll taxes and other taxes unaffected by the Bush proposal. Fact sheets are available for each state.

View press release

Center Responds to Secretary O'Neill on the Benefits of the Bush Tax Cut for Highest-Income Taxpayers
by Robert Greenstein
March 1, 2001

In this document, the Center replies to criticisms made by Treasury Secretary Paul O'Neill of a statistic he attributed to the Center regarding the share of the Bush tax cut that would go to the wealthiest one percent of taxpayers.

The Latest IRS Data on After-Tax Income Trends
by Isaac Shapiro
February 26, 2001

This analysis of new IRS data shows that in 1998, the income gains at the top of the income spectrum far outpaced income gains among the rest of the population. These data confirm the long-term growth in income disparities.

View press release

More Than Half of Black and Hispanic Families Would Not Benefit from Bush Tax Cut
by Isaac Shapiro, Allen Dupree, and James Sly
February 15, 2001

This analysis finds that 53 percent of black and Hispanic families with children would receive no tax reduction if the Bush plan were enacted; about three in four of these families include someone who is working.

View press release

Those $1,600 Tax Cut Checks
by Isaac Shapiro and Robert Greenstein
February 14, 2001

This paper examines the Administration's misleading claim that the typical American family of four would receive a $1,600 tax cut under the White House tax proposal.

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Taking Down the Toll Booth to the Middle Class? Myth and Reality Governing the Bush Tax Plan and Lower-Income Working Families
by Robert Greenstein and Isaac Shapiro
February 8, 2001

This analysis explains why many lower- income families would not benefit from the Administration's proposed tax cuts.

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An Estimated 12 Million Low- and Moderate-Income Families, with 24 Million Children, Would Not Benefit from Bush Tax Plan
by Isaac Shapiro, Allen Dupree, and James Sly
February 7, 2001

This paper explains that, based on an examination of recent Census data, one-third of families and their children would not benefit from the Bush tax cut proposal.

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How Would Families at Different Income Levels Benefit from the Bush Tax Cut?
by Robert Greenstein
February 7, 2001

This report analyzes the degree to which those with the highest incomes would benefit from the Bush tax proposals.

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Tax Cuts, the Budget, and the Economy

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Tax Cuts Vs. Spending Increases: Is There a Basis for Chairman Greenspan's Preference for Tax Cuts?
by Jason Furman and Peter Orszag
March 26, 2001

This analysis examines Federal Reserve Board Chairman Alan Greenspan's statement that tax cuts are preferable to spending increases as a means of avoiding "excessive" surpluses. The analysis finds little evidence to justify an automatic preference for tax cuts on other than ideological grounds.

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Marginal Tax Rate Reductions and the Economy: What Would Be the Long-Term Effects of the Bush Tax Cut?
by Peter R. Orszag
March 16, 2001

This analysis finds that the claims made by proponents of the Bush tax plan that marginal tax rate reductions would promote economic expansion are substantially exaggerated; the proposed tax cuts might not be beneficial for the economy.

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How to Avoid Over-Committing the Available Surplus: Would a Tax-Cut "Trigger" Be Effective or Is There a Better Way?
by Richard Kogan
March 6, 2001

This analysis compares two strategies for minimizing the risk that enacting tax cuts or program increases will produce future deficits — a "trigger" and a "budget reserve" — and concludes that a budget reserve would be much simpler and far more likely to be effective.

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Is the House Tax Bill Necessary to Avoid a Recession?
by Peter R. Orszag
March 5, 2001

This analysis examines the argument made by supporters of the House tax bill that a large tax cut will help spur the economy. It notes the difficulties of using taxes to manage the macro-economy and explains why the House tax cut is poorly designed to avert a near-term recession in any event.

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Is a Large Tax Cut Needed to Forestall an Explosion in Spending?
by Robert Greenstein
February 27, 2001

This analysis explores whether spending increases approved in 2000 were so large as to require a large tax cut to restrain furthergrowth in spending. It shows that spending as a share of Gross Domestic Product actually is at its lowest level in decades.

The Greenspan Concern Over Public Ownership of Private Assets: Can the Social Security Trust Fund Safely Own Such Assets?
by Peter Orszag and Robert Greenstein
February 26, 2001

This analysis evaluates Federal Reserve Chairman Alan Greenspan's concern about allowing the government to hold private assets. It argues that allowing the Social Security trust fund to invest in private assets would eliminate the need to consume most or all of the projected surpluses or to divert Social Security funds into individual accounts.

"The Peril of Zero Debt" and the Long-Term Budgetary Outlook: Some Questions Regarding Chairman Greenspan's Recent Testimony
by Peter R. Orszag
February 22, 2001

This analysis evaluates Federal Reserve Chairman Alan Greenspan's argument that a large tax cut is needed to avoid the accumulation of large budget surpluses after the national debt has been eliminated and the resulting investment of those surpluses in private assets. It argues that dissipating the surpluses through large tax cuts would limit our ability to prepare for the increased long-term costs of our aging population.

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Surpluses or Deficits? Projections of a Large Budget Surplus Are Surrounded by a High Degree of Uncertainty
by Richard Kogan
February 6, 2001

This report points out that even without tax cuts or spending increases, there is a noticeable chance the government will run deficits outside of Social Security and Medicare.

CBO Assumes Faster Economic Growth than Previously, and Therefore a Larger Ten-Year Surplus
by Richard Kogan
January 31, 2001

This report explains that the larger CBO ten-year surpluses reflect new projections of faster economic growth.

 
The Estate Tax

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If Estate Tax Is Repealed, Repeal of Gift Tax Would Not Be Far Behind
by Iris Lav
May 11, 2001

This analysis explains that repeal of the Estate Tax would make future repeal of the Gift Tax more likely, which in turn would lead to massive income tax avoidance and evasion and attendant large revenue loses.

Lower-Cost Estate Tax Repeal Reflects Slow Phase-In
by Joel Friedman
April 4, 2001

This report analyzes the House Ways and Means Committee bill to repeal the estate tax and finds that it has a much lower initial cost than other repeal proposals because the full costs of repeal have been pushed to the second ten years (2012-2021).

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Can Capital Gains Carry-Over Basis Replace The Estate Tax?
by Iris J. Lav and Joel Friedman
March 15, 2001

This analysis of a proposal to partially replace the estate tax with a change in capital gains taxation explains that it would lower the cost of estate tax repeal by only a small amount and would be extremely difficult to implement.

4,500 Very Large Estates Would Receive As Much in Annual Tax Reductions Under Bush Plan As 140 Million Americans
by Isaac Shapiro, Iris J. Lav, and James Sly
February 26, 2001

This report shows that a small number of large estates would receive as much in tax-cut benefits from repeal of the estate tax as many millions of American families would receive from the entire Bush tax proposal.

View press release

Estate Tax Repeal: A Costly Windfall for the Wealthiest Americans
by Iris J. Lav and Joel Friedman

February 6, 2001

This report examines the cost of repealing the estate tax to federal and state governments and the impact of repeal on small businesses and farmers. It also explains why the wealthiest Americans would benefit most from the repeal.

View fact sheet

 
Health Tax Issues

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Likely Medical Savings Account Amendments to Patient's Bill of Rights Could Drive Up the Price of Health Insurance Premiums and Increase the Number of Uninsured
by Iris J. Lav and Edwin Park

June 13, 2001

Substantial expansion of MSAs would be much more likely to degrade health insurance coverage — and to increase the number of uninsured — than to expand health care coverage and reduce the ranks of the uninsured.

Administration MSA Expansions Could Drive Up Health Insurance Premiums and Create New Tax Shelter
by Iris J. Lav and Edwin Park
April 24, 2001

This analysis of the Administration’s budget proposal to expand Medical Savings Accounts shows that it would greatly increase the potential for use of the accounts as a tax shelter and compound the risk that MSAs pose to health care consumers, particularly those in need of comprehensive, affordable health coverage.

Tax Credits for Individuals to Buy Health Insurance Won't Help Many Uninsured Families
by Iris J. Lav and Joel Friedman
February 15, 2001

This report explains that the type of individual tax credits now under discussion are unlikely to help many uninsured families obtain quality health care and could erode coverage for substantial numbers of currently insured families.

 
The Bush Budget

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Under President’s Budget, Education Funding Would Grow 5.3 Percent
by Richard Kogan
April 25, 2001

This examination of the Administration’s claim that its budget includes an 11.5 percent increase in federal education funding finds that such funding actually would grow by only 5.3 percent.

Budget Request for WIC Is Insufficient
by Robert Greenstein
April 24, 2001

This short analysis explains that the President’s budget for the Supplemental Nutrition Program for Women, Infants, and Children could force states to turn away more than 100,000 eligible recipients.

The Emergency Reserve and the Administration’s Budget
by Robert Greenstein
April 12, 2001

This brief report explains that the Administration has inappropriately used its proposal to establish a reserve fund for major natural disasters to inflate what it says is the level of increase it is seeking in domestic discretionary programs.

The Myth of the 4 Percent Spending Increase
by Richard Kogan
April 11, 2001

This report explains that while President Bush frequently says he is proposing a four percent increase in funding for appropriated programs, most of that increase is devoted to defense; the increase for ongoing domestic programs would not even be enough to compensate for inflation.

The Budget Plan Reported by the House Budget Committee
by Richard Kogan and James Sly
March 30, 2001

This report explains that the budget plan approved by the House Budget Committee (which is based on the President's budget framework) heavily favors tax cuts over program increases and sets a target for appropriated programs that is lower than appears politically feasible or desirable.

In Bush Budget, Tax Cuts for Top One Percent Are Larger than Health, Education, and All Other Initiatives Combined
March 2, 2001

This analysis of the Bush budget finds the top one percent of the population would receive in tax cuts an amount greater than the amount the budget devotes to all other initiatives combined, including a prescription drug proposal for seniors and increases in education, health research, defense, and other areas.

The Administration's Budget: Gaps Between Rhetoric and Reality
by Robert Greenstein, Richard Kogan, and Joel Friedman
March 1, 2001

This initial analysis of the President's budget explains that it relies on significant, unspecified reductions in non-entitlement programs, that the Administration's tax cut costs at least $2 trillion, and that the budget pays down less debt than it could.

The Administration's Budget Reserve: Do the Numbers Add Up?
by Robert Greenstein, Richard Kogan, and Joel Friedman
March 1, 2001

This paper shows that while the Administration claims its budget includes an $842 million reserve, in fact the budget lacks sufficient funds to avoid a return to deficits outside the Social Security and Medicare Hospital Insurance trust funds, unless large cuts in domestic programs are enacted.

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