The President's Budget and Tax Plans

Obama’s Transition Tax Is Sound, But Higher Rate Would Bring More Revenue Without Adverse Economic Effects

President Obama’s budget will propose a 14 percent tax on multinational corporations’ existing offshore profits and invest the $238 billion in revenues in infrastructure, Bloomberg reports.

That’s a sound way to address corporations’ huge stock of foreign profits, much of it in low-tax jurisdictions like Bermuda and Luxembourg, in transitioning to a reformed international tax system.

But setting the rate above 14 percent would produce more revenue without affecting firms’ decisions about where and how to invest. Read more

 

Obama Spending Proposal Makes Sense for Short and Long Run

The President’s proposal, in his upcoming fiscal year 2016 budget, to provide partial relief from the Budget Control Act’s (BCA) “sequestration” cuts for 2016 and fully offset it with alternate deficit reduction is consistent with both the BCA and long-term fiscal responsibility.

The proposal would allow modest near-term funding improvements in areas such as science, education, and infrastructure.

And its offsetting deficit-reduction measures would likely improve the longer-term budget outlook. Read more

 

Greenstein: Obama Tax Proposals Are More Progressive Than They May Appear

The President’s new tax proposals would raise revenues from high-income and wealthy filers and devote much of the savings to other tax proposals that would benefit low- and moderate-income filers.

Estimates from the Urban-Brookings Tax Policy Center (TPC) show that the President’s proposals are quite progressive, but some readers are interpreting those estimates as meaning that low- and middle-income families get only modest benefits. That’s not the case. Read more

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More: Tax Analyses

Dynamic Scoring

House “Dynamic Scoring” Rule Likely Will Mean More Tax Cuts — Not More Information

House Republicans amended House rules to require the use of “dynamic scoring” for official cost estimates of tax reform and other major legislation.  

Incoming Ways and Means Committee Chairman Paul Ryan has said this change is designed simply to generate more information on the impact of proposed policies. In reality, however, the House would be asking CBO and JCT to provide less information, not more, and the new rule could facilitate congressional passage of tax cuts that are revenue-neutral only on paper. Read more

Related: Brief: Why Budget and Tax Plans Shouldn’t Use Dynamic Scoring

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