Reports by Joel Friedman
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Last-Minute Addition To Tax Package Would Make Health Savings Accounts More Attractive As Tax Shelters For High-Income Individuals
Revised December 7, 2006
As part of the last-minute deal making today on the “tax extenders” package, House and Senate negotiators have agreed to include an expansion of Health Savings Accounts that would make these accounts more lucrative as tax shelters for high-income individuals. The HSA expansion is identical to legislation (H.R. 6134) … -
Comparing the House Minimum Wage and Estate Tax Proposals
Revised August 3, 2006
House leaders are following a legislative strategy that involves marrying an increase in the minimum wage to a sharp reduction in the estate tax. This approach juxtaposes policies that are aimed at two groups at opposite ends of the economic spectrum: minimum-wage workers for whom full-time work currently pays $10,700 a year, and individuals who … -
House Estate Tax Proposal Has Essentially the Same Large Long-Term Cost As Earlier Version
July 28, 2006
Just five weeks after passing legislation that would drastically reduce the estate tax (H.R. 5638), the House of Representatives is considering another estate-tax proposal. The House passed H.R. 5638 in the hope that it would attract the needed 60 votes in the Senate, but Senators who oppose repealing most or all of the estate tax did not embrace the House alternative, … -
Saver's Credit For Moderate-Income Families Would Fade Away Over Time Under House-Passed Pension Bill
Revised July 17, 2006
The saver’s credit — the only retirement tax cut enacted in 2001 aimed at people with incomes under $50,000 — is scheduled to expire at the end of this year. The House proposed a permanent extension of the saver’s credit as part of its pension bill, and both the House and Senate proposed shorter-term extensions of the saver’s credit as part of their original … -
The Recent Upturn in Revenues and OMB's Mid-Session Review
Revised July 14, 2006
Summary The Mid-Session Review issued on July 11 by the White House Office of Management and Budget projects that fiscal year 2006 revenues will be significantly above — and the 2006 deficit significantly below — the levels forecast in the President’s budget in February. This year’s strong … -
Thomas Estate Tax Proposal Still "Near Repeal"
Revised June 23, 2006
On June 22, the House of Representatives passed estate-tax legislation (H.R. 5638), introduced by House Ways and Means Chairman Bill Thomas, that is very similar to — and even slightly more costly than — the most recent estate-tax proposal floated by Senator Jon Kyl. Both proposals would cost nearly as much as permanent repeal of the … -
High Cost of Thomas Proposal Reflects the Low Effective Tax Rates Estates Would Face Proposal’s Benefits Would Go Primarily to Largest Estates
Revised June 23, 2006
On June 22, the House passed legislation to sharply reduce the estate tax, and the Senate may vote on the legislation next week. Introduced by House Ways and Means Committee Chairman Bill Thomas, the measure would exempt the first $10 million of an estate for a couple ($5 million for an individual) and would index this exemption for inflation after 2010.… -
New Estate Tax Anecdotes Dredge Up Old Myth That the Estate Tax Claims Half of an Estate
June 14, 2006
Opponents of the estate tax often claim that it forces estates to pay half of their assets in taxes. For example, during the Senate debate on the estate tax earlier this month, Senator Jon Kyl told the story of a businessman whose family allegedly had to pay “half of the value of [his] company to the government.” Senator Kyl went so far … -
New Joint Tax Committee Estimates Show Modified Kyl Proposal Still Very Costly
Revised June 13, 2006
On June 8, the Senate rejected, by a vote of 57-41, a motion to consider permanent repeal of the estate tax (under Senate rules, the measure required 60 votes to pass). During the lead-up to the vote, Senator Jon Kyl floated a modification of his longstanding “compromise” proposal to repeal most but not quite all of the estate tax. … -
Cost of Estate Tax Compliance Does Not Approach the Total Level of Estate Tax Revenue
Revised June 9, 2006
It has been claimed that the costs of complying with the estate tax are nearly equal to the total amount of revenue the tax raises. While it is true that wealthy people devote considerable time and money to sheltering their estates from taxation, there is no credible evidence that compliance costs — including the … -
The State of the Estate Tax as of 2006
Revised June 2, 2006
With the Senate preparing to vote on permanent repeal of the estate tax in June, it is important to take stock of the changes that have already been made to the tax. As a result of legislation enacted in 2001, the portion of an estate that is exempt from taxation has more than doubled since 2000 and stands at $2 million ($4 million per couple) in 2006.… -
Estate Tax "Compromise" With 15 Percent Rate Is Little Different Than Permanent Repeal
Revised June 2, 2006
The Senate is expected to vote on estate tax repeal in June of this year. Permanent repeal of the estate tax would cost nearly $1 trillion between 2012 and 2021, the first ten year period in which its costs would be fully felt. (This cost includes $776 billion in revenue loss and $213 billion in higher interest payments on the federal debt.[1]) In … -
The House-Passed Budget Plan
Revised May 22, 2006
In the early morning of May 18, the House passed a budget plan (or “budget resolution”) for fiscal year 2007. In a separate vote later that day, the Housed “deemed” that the Congress has given final approval to the plan. As a result of this “deemer,” the House budget plan is now … -
Reconciliation Tax Cuts Would Average $43,000 for Households with Income over $1 Million
Revised May 12, 2006
The final agreement on the $70 billion tax-cut reconciliation package offers virtually no benefits to low- and moderate-income households, but showers high-income households with very large tax cuts. The Urban Institute-Brookings Institution Tax Policy Center has examined the major provisions that are in the package, including a two-year extension of capital gains and … -
Tax Reconciliation Agreement Distorted by Obsession with Capital Gains and Dividend Tax Cuts
Revised May 11, 2006
House and Senate negotiators announced an agreement yesterday on a tax-cut reconciliation bill that would reduce revenues by $70 billion between 2006 and 2010, according to Joint Committee on Taxation estimates. Although nearly half of this cost reflects a one-year extension of relief from the Alternative Minimum Tax, it is the two-year extension of the … -
Recent Tax and Income Trends among High-Income Taxpayers
April 10, 2006
Administration officials have consistently sought to portray the distribution of benefits from the 2001 and 2003 tax cuts as balanced or even progressive. Recently, for example, the Treasury Department released a “Tax Relief Kit,” which includes a fact sheet entitled “Who Pays Most Individual Income Taxes?” The fact sheet … -
Federal Tax Burdens at Lowest Levels in Decades
April 10, 2006
The percentage of income that most categories of taxpayers pay in federal taxes is at the lowest level in decades. Despite this fact — and despite the large current federal budget deficit and the even larger fiscal problems projected for coming decades — the Administration and Congress are pushing for additional tax cuts that would aggravate … -
The Capital Gains and Dividend Tax Cuts and The Economy
March 27, 2006
The Treasury Department recently released a report entitled “The Economic Effects of Cutting Dividend and Capital Gains Taxes in 2003.” While the text of the new document acknowledges that gains in the economy since 2003 “are the result of a combination of many factors,” the pictures that accompany the report communicate a less nuanced message. [1] The graphs … -
A Pay-As-You-Go Rule That Would Exempt All Tax Cuts Would Make a Mockery of Efforts to Restore Fiscal Discipline
March 20, 2006
The House of Representatives will apparently consider legislation in coming weeks that would make a number of changes in the federal budget process. It is possible that this legislation will include a provision endorsed by the House Budget Committee in 2004 that would resurrect the “pay-as-you-go” rules, but in a … -
Administration Proposals To Hide Tax-Cut Costs
February 14, 2006
The President’s 2007 budget includes two proposals that risk corrupting federal budget rules in order to facilitate passage of Administration tax cuts. One proposal calls on Congress to adopt a new scoring convention that would make the cost of extending the 2001 and 2003 tax cuts disappear; under this proposal, legislation to … -
Effects of the Tax Reform Panel’s Proposals on Low- and Moderate-Income Households
February 3, 2006
Executive Summary On November 1, 2005, the President’s Advisory Panel on Tax Reform presented its recommendations to Treasury Secretary John Snow. The panel’s report offers two alternative comprehensive reform plans, a “simplified income tax plan” and a “growth and investment tax plan.” Both plans, the panel argues, would improve on the current … -
Capital Gains and Dividend Tax Cuts
January 30, 2006
The tax-cut package enacted in 2003 reduced to 15 percent the top tax rate on long-term capital gains and corporate dividends. Although these tax cuts are slated to expire in 2008, Congress is already debating as part of the current tax reconciliation process whether to extend these tax cuts for another two years, through 2010.[1] In addition, the President and other Administration … -
New, Unnoticed CBO Data Show Capital Income Has Become Much More Concentrated At the Top
January 29, 2006
Congress is considering whether to extend reductions in the tax rates on capital gains and dividend income beyond their scheduled expiration date at the end of 2008. Proponents of these extensions often argue that stock ownership is widespread and thus the benefits of extending these tax cuts will be widespread as well. In other analyses, we have … -
New CBO Data Indicate Growth in Long-Term Income Inequality Continues
January 29, 2006
The Congressional Budget Office recently released extensive data on household incomes and tax liabilities for 2003.[1] CBO issues the most comprehensive data available on changes in incomes and taxes for different income groups, capturing trends at the very top of the income scale that are not shown, for example, in Census data. The new CBO report highlights the degree to which …
