Tax — Federal
The House may soon vote on a measure to repeal the 2.3-percent excise tax on medical devices that policymakers enacted in 2010 to help pay for health reform. The excise tax is sound, however, and the arguments against the tax don’t withstand scrutiny:
- The tax does not single out the medical device industry for unfair treatment.
- The tax will not cause manufacturers to shift production overseas.
- The tax will have little effect on innovation in the medical device industry.
The industry’s lobbying campaign against the medical device tax is based on misinformation and exaggeration, as a number of industry executives and analysts confirm.
Policymakers have made substantial progress in recent years in “making work pay” for low-income families with children by strengthening the Earned Income Tax Credit (EITC) and Child Tax Credit.
But low-income childless workers — that is, childless adults or non-custodial parents — receive little or nothing from the EITC. As a result, childless workers are the sole group that the federal tax system taxes deeper into poverty.
By making more childless workers eligible for the EITC — including those working full time at the minimum wage — and boosting the credit for workers currently eligible, these measures hold strong promise of increasing employment and reducing poverty.
The House has voted to make permanent an array of “tax extenders,” a set of primarily corporate tax provisions that policymakers routinely extend for a year or two at a time.
This approach isn’t fiscally responsible. It also places extending corporate tax breaks above extending key provisions of the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) that benefit tens of millions of low- and middle-income working families (and are slated to expire at the end of 2017).
The income tax on individuals and the payroll tax, which is deducted from workers’ wages and used to help finance Social Security and Medicare, each made up about 40 percent of federal revenues in 2010. The federal government also collects revenue from corporate taxes, excise taxes, and other sources.
The Center analyzes major tax proposals, examining their likely effects on the economy and on the government’s ability to address critical national needs, especially over the long term. We place particular emphasis on the effects of tax proposals on households at different income levels. In addition, we analyze trends in the level of federal revenues, income distribution, and tax burdens.
March 5, 2015
EITC and Child Tax Credit Promote Work, Reduce Poverty, and Support Children’s Development, Research Finds
Updated March 3, 2015
Updated February 23, 2015
Letting Key Provisions of Working-Family Tax Credits Expire Would Push 16 Million People Into or Deeper Into Poverty
Updated February 20, 2015
Updated February 20, 2015
- View All By Date