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Policy Basics: Federal Payroll Taxes
Updated April 15, 2013
The federal government levies payroll taxes primarily on wages and self-employment income and uses most of the revenue to fund Social Security, Medicare, and other social insurance benefits. Federal payroll taxes generated $845 billion in 2012, or 35 percent of all federal revenues (see “Policy Basics: Where Do Federal Tax Revenues Come From?”). … -
President Obama’s Deficit-Reduction Package and Other Proposals in the 2014 Budget
April 11, 2013
The President’s 2014 budget is presented in two parts. One part includes the package of deficit- reduction policies that the President included in his last offer to Speaker Boehner during the “fiscal cliff” negotiations in December 2012. This package would reduce the deficit by $1.8 trillion over the next decade … -
Excise Tax on Medical Devices Should Not Be Repealed
Updated March 11, 2013
Bills introduced in the House (H.R. 523) and Senate (S. 232) would repeal the 2.3-percent excise tax on medical devices that policymakers enacted in 2010 to help pay for health reform. The provision is sound, however, and the arguments against the tax don’t withstand scrutiny. The tax does not single out the medical … -
Jared Bernstein Testimony: Tax Expenditures: How Cutting Spending Through the Tax Code Can Lower the Deficit, Improve Efficiency, and Boost Fairness in the US Tax Code
March 5, 2013
Chairman Murray, ranking member Sessions, I thank you for the opportunity to testify today. These are uniquely challenging times for fiscal policy. Our national economy continues to face a series of self-imposed fiscal deadlines in the forms of cliffs, ceilings, and most recently, sequestration. Various independent analyses find … -
Tax Expenditure Reform: An Essential Ingredient of Needed Deficit Reduction
February 27, 2013
The revenue raised as part of January’s American Tax Relief Act (ATRA) came primarily as a result of raising tax rates on high-income households. Yet throughout the negotiations around avoiding the fiscal cliff last year, both President Obama and Speaker Boehner called for raising revenue through limiting tax deductions, exclusions, and other tax breaks … -
The Fiscal and Economic Risks of Territorial Taxation
January 31, 2013
Many policymakers say they want to reform the U.S. system of taxing multinational corporations so that it better promotes growth and helps reduce budget deficits. Unfortunately, one proposal that has received significant attention would take the tax code in an ill-advised direction, creating serious economic and fiscal risks. … -
Chart Book: The Bush Tax Cuts
December 10, 2012
To provide context for the debate about addressing expiring tax provisions and reducing long-term deficits, we’ve collected some of our charts related to the Bush tax cuts, which show that the tax cuts (1) are costly, (2) have worsened inequality, and (3) should be allowed to expire on schedule for incomes over $250,000. 1. The Bush Tax Cuts Are Costly … -
Restraining Tax Expenditures Should Complement, Not Replace, Letting High-Income Bush Tax Cuts Expire
November 29, 2012
Some policymakers have suggested capping itemized deductions for taxpayers with incomes over $250,000 (for couples) and $200,000 (for singles) as an alternative to letting President Bush’s tax cuts for these taxpayers expire on schedule. To raise the same amount of revenue, however, would require tax changes that pose serious … -
Payroll Tax Cut and Emergency Unemployment Insurance Still Needed to Support the Recovery
October 16, 2012
Among the various tax and spending measures scheduled to expire at the end of this year, the temporary payroll tax cut enacted in 2010 and emergency federal unemployment insurance (UI) are among the most cost-effective at supporting the economic recovery without endangering efforts to control long-term deficits and debt. Given the state … -
Raising Today’s Low Capital Gains Tax Rates Could Promote Economic Efficiency and Fairness, While Helping Reduce Deficits
September 19, 2012
The large tax preferences that capital gains enjoy over “ordinary” income, such as salary and wages, add to budget deficits, widen income inequality, and do little if anything to promote economic growth. Recent bipartisan deficit commissions have called for eliminating or sharply reducing these tax preferences, as the … -
Senate and House GOP Leaders' Tax Proposals Would Provide Windfall for Heirs of Largest Estates
Revised July 24, 2012
Senate and House Republican leaders are proposing to provide extremely large tax breaks averaging over $1 million per estate to the heirs of the biggest 0.3 percent of estates — that is, to the heirs of the richest three of every 1,000 people who die. The Senate and House leadership proposals each would do so by extending the … -
Allowing High-Income Bush Tax Cuts to Expire Would Affect Few Small Businesses
July 19, 2012
Allowing the top two marginal tax rates to return to pre-2001 levels as scheduled next year would affect very few small businesses, a recent Treasury Department study found.[1] The study shows that only 2.5 percent of small business owners face the top two rates. The claims that allowing the Bush tax cuts for high-income people … -
Budget Plans Should Not Rely on "Dynamic Scoring"
Revised June 21, 2012
Some Members of Congress and outside groups are calling for the use of "dynamic scoring" to estimate the budgetary effects of major legislation, notably tax reform proposals. In February, for instance, the House passed a bill (H.R. 3582) requiring the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) … -
Cantor Proposal for 20 Percent Business Tax Deduction Would Provide Windfall for Wealthy, Not Create Jobs
Updated May 11, 2012
Though billed as a measure to create jobs by aiding small businesses, House Majority Leader Eric Cantor's (R-VA) proposal for a 20 percent tax deduction in 2012 for businesses with fewer than 500 employees would benefit many high-income taxpayers — including many affluent doctors, lawyers, and stockbrokers — while failing to … -
Video: Jared Bernstein and Chye-Ching Huang Discuss Tax Rates and the Economy
May 8, 2012
Jared Bernstein and Chye-Ching Huang discuss the Center's new, comprehensive analysis of recent findings on the economic effects of raising federal income taxes on upper-income taxpayers as part of a balanced effort to reduce budget deficits.
Duration 8:25
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Media Briefing: The Effect on the Economy of Raising Tax Rates on High-Income Households as Part of a Balanced Effort to Reduce Deficits - What the Evidence Shows
April 25, 2012
The Center on Budget and Policy Priorities held a conference call briefing on Wednesday, April 25 to discuss the Center’s new, comprehensive analysis of recent findings on the economic effects of raising federal income taxes on upper-income taxpayers.
The panel featured leading authorities on tax policy, Leonard E. Burman, Daniel Patrick Moynihan Professor of Public Affairs at Syracuse University, and William G. Gale, Co-Director of the Urban-Brookings Tax Policy Center, and Chye-Ching Huang, Tax Policy Analyst with the Center on Budget and Policy Priorities.
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Recent Studies Find Raising Taxes on High-Income Households Would Not Harm the Economy
April 24, 2012
Many policymakers and pundits assume that raising federal income taxes on high-income households would have serious adverse consequences for the economy. Yet this belief, which has been subject to extensive research and analysis, does not fare well under scrutiny. As three leading tax economists recently concluded in a … -
The False Choice of National Defense Versus Helping the Poor
April 20, 2012
House committees this week approved sharp cuts in the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps), the elimination of the Social Services Block Grant, and other cuts that would harm large numbers of low- and moderate-income Americans.[1] Proponents claim the cuts are needed to generate enough savings … -
Statement by Chad Stone, Chief Economist, on Pending House Tax Cut and House Committee SNAP Benefit Cuts
April 18, 2012
The House majority is pursuing legislation this week that makes no economic sense. The full House will pass a $46 billion tax cut that’s advertised as a “job-creating” measure, while the House Agriculture Committee approved a plan today to save $36 billion by cutting the … -
New Tax Cuts in Ryan Budget Would Give Millionaires $265,000 on Top of Bush Tax Cuts
Revised April 12, 2012
Even as House Budget Committee Chairman Paul Ryan’s budget would impose trillions of dollars in spending cuts, at least 62 percent of which would come from low-income programs,[1] it would enact new tax cuts that would provide huge windfalls to households at the top of the income scale. New analysis by the Urban-Brookings Tax Policy Center (TPC) … -
Blog Post: Ryan Plan Unlikely to Balance the Budget for Decades
March 28, 2012
Despite its massive spending cuts, House Budget Committee Chairman Paul Ryan’s budget (which the House is considering this week) would still have a deficit of $287 billion in fiscal year 2022. And the Congressional Budget Office estimates that it wouldn’t produce a surplus until 2040. Chairman Ryan disagrees, saying in … -
Blog Post: Another Quarter-Million for Millionaires Under Ryan Tax Plan
March 28, 2012
Our new report shows that House Budget Committee Chairman Paul Ryan’s tax plan would provide $265,000-a-year tax cuts to the nation’s highest-income households. Here’s an excerpt: Even as House Budget Committee Chairman Paul Ryan’s budget would impose trillions of dollars in spending cuts, 62 percent of which would come from … -
Blog Post: Chairman Ryan’s Misleading Chart
March 27, 2012
House Budget Committee Chairman Paul Ryan recently summarized his new tax proposal this way: [W]e’re saying get rid of all the special interest loopholes and tax shelters that are disproportionately used by those higher income earners, get rid of those tax shelters, so you can lower tax rates for everybody, and make us better wired for economic growth and job creation. Chairman Ryan has also said that most tax-expenditure benefits go to high-income people. The lead tax chart in Chairman Ryan’s budget document seems to support his statement, suggesting that the tax code includes a series of egregious loopholes (or “tax expenditures”) that mostly flow to very rich individuals. It gives the impression that we can easily eliminate tax … -
Blog Post: Chairman Ryan’s Misleading Chart
March 27, 2012
House Budget Committee Chairman Paul Ryan recently summarized his new tax proposal this way: [W]e’re saying get rid of all the special interest loopholes and tax shelters that are disproportionately used by those higher income earners, get rid of those tax shelters, so you can lower tax rates for everybody, and make us better wired for economic growth and job creation. Chairman Ryan has also said that most tax-expenditure benefits go to high-income people. The lead tax chart in Chairman Ryan’s budget … -
Blog Post: Ryan Roundup, 2012: Everything You Need to Know About Chairman Ryan's Budget
March 23, 2012
Below is a compilation of the CBPP blog posts to date on House Budget Committee Chairman Paul Ryan’s new budget. Check back here frequently, as we will update this list as we put out new material. http://bit.ly/RyanPosts Overview/General Greenstein Statement March 21, 2012 "The new Ryan budget is a … -
Ryan Budget's Claim to Finance Its Tax Cuts for the Wealthy By Curbing Their Tax Breaks Does Not Withstand Scrutiny
March 22, 2012
Despite warning that the nation faces the “perils of debt,” House Budget Committee Chairman Paul Ryan introduced a budget on March 20 whose tax proposals would be extremely costly and would disproportionately favor the nation’s highest-income households and large corporations.[1] His budget would cut the top … -
Blog Post: Greenstein on the Ryan Budget
March 21, 2012
We’ve issued a statement from Robert Greenstein on the budget from House Budget Committee Chairman Paul Ryan. Here’s the opening: The new Ryan budget is a remarkable document — one that, for most of the past half-century, would have been outside the bounds of mainstream discussion due to its extreme nature. In essence, this budget is … -
Statement of Robert Greenstein, President, on Chairman Ryan's Budget Plan
March 21, 2012
The new Ryan budget is a remarkable document — one that, for most of the past half-century, would have been outside the bounds of mainstream discussion due to its extreme nature. In essence, this budget is Robin Hood in reverse — on steroids. It would likely produce the largest redistribution of income from the bottom to the top in modern U.S.… -
Can Governor Romney’s Tax Plan Meet Its Stated Revenue, Deficit, and Distributional Goals at the Same Time?
March 2, 2012
Unveiling his tax plan on February 22, Governor Romney's campaign said it would: 1) make permanent President Bush's tax cuts (but not those enacted under President Obama, which are scheduled to expire at the same time and which expanded several refundable tax credits for low- and middle-income families); 2) then cut individual … -
Administration’s Corporate Tax Reform Framework a Promising Start but Falls Short on Raising Revenue
Revised February 28, 2012
The Administration has advanced a coherent framework for corporate tax reform that could lead to a more efficient corporate tax regime. [1] The framework's main weakness is that it seeks no deficit-reduction contribution from corporate tax reform, aiming only for revenue neutrality. Given the nation's serious long-term budget problems and the … -
Six Tests for Corporate Tax Reform
Updated February 24, 2012
Congress may consider major changes to the corporate tax code this year. In light of the nation's significant economic and budgetary challenges, a well-designed corporate tax reform proposal should: Contribute to long-term deficit reduction. Corporate tax revenues are now at historical lows as a share of the economy, at a time when the … -
Video: A Discussion with Jared Bernstein and Chye-Ching Huang on Capital Gains Tax
January 31, 2012
“There are lots of good reasons to get rid of” the preferential tax treatment of capital gains, Chye-Ching Huang tells Jared Bernstein in this video.
She notes, for instance, that “at the same time that capital gains income has been growing really rapidly, and growing at the very top of the income distribution, we have been cutting the rates. That is one of the major reasons why the tax system hasn’t been doing as much to push against income inequality as it used to.”
Chye-Ching and Jared discuss what capital gains are and the tax advantages they receive compared to ordinary income.
Duration: 4:52
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Repeal of Contractor Withholding Provision Would Encourage
Tax Abuse
October 26, 2011
The House will vote tomorrow on whether to repeal a 2006 law designed to fight tax abuse by private contractors for federal, state, or local governments. Congress and President George W. Bush enacted the 2006 law after the Government Accountability Office (GAO) uncovered widespread tax abuse by government contractors. … -
Video: A Discussion with Jared Bernstein and Chuck Marr on Tax Repatriation
October 20, 2011
Congress is considering a temporary "repatriation tax holiday" that would allow corporations to bring their overseas profits back to the United States at a fraction of the normal corporate tax rate. Proponents claim that corporations would then invest these earnings in the United States, but the evidence shows that a tax holiday would fail to boost the economy while increasing deficits and encouraging companies to locate jobs and future investments overseas.
In this video, Jared Bernstein and Chuck Marr discuss the proposal and its likely harmful impact.
Duration: 7:19
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Repatriation Tax Holiday Would Increase Deficits and Push Investment Overseas
October 12, 2011
Despite proponents' claims to the contrary, a proposal to enact a second tax holiday for the profits that U.S.-based multinational corporations bring back to the United States from foreign accounts would cost tens of billions of dollars in federal revenue — boosting deficits and debt – while not achieving its proponents' promise of … -
Testimony: Chad Stone, Chief Economist, on Policy Prescriptions for the Economy
September 15, 2011
Chairman Conrad, Senator Sessions, and other members of the Committee, thank you for the opportunity to testify today on policy prescriptions for the economy. To use the medical analogy in the title of this hearing, the U.S. economy is experiencing a long and difficult recovery from a severe acute illness — the 2007-2009 financial … -
Tax Holiday for Overseas Corporate Profits Would Increase Deficits, Fail to Boost the Economy, and Ultimately Shift More Investment and Jobs Overseas
Updated June 23, 2011
Momentum is growing in Congress behind legislation to enact another “repatriation tax holiday” that allows multinational corporations to bring profits held overseas back to the United States and pay tax on them at a rate of only about 5 percent (rather than the normal tax rate on corporate profits). But the … -
Under House Budget, “Tax Reform” Places Top Priority on High-Income Tax Cuts and Ignores Deficit Reduction
Updated May 26, 2011
The tax proposals in the budget that the House approved on April 15 place a top priority on cutting taxes for high-income people, while doing nothing to reduce budget deficits, themselves. [1] In addition to making the Bush tax cuts permanent and continuing to provide relief from the Alternative Minimum Tax … -
Statement of Robert Greenstein, President, on Chairman Ryan’s Budget Plan
Updated April 20, 2011
Chairman Ryan’s sweeping budget plan has been labeled “courageous,” but it’s a cowardly budget in a crucial respect. It proposes a dramatic reverse-Robin-Hood approach that gets the lion’s share of its budget cuts from programs for low-income Americans — the politically and economically weakest group in … -
Statement: Robert Greenstein on President Obama's Deficit-Reduction Plan
April 13, 2011
President Obama made an important contribution today to efforts to address the nation’s long-term fiscal problems, proposing a plan to reduce deficits by about $4 trillion over the next 12 years and meet the essential goal of stabilizing the national debt so that it rises no faster than … -
Ryan Plan’s “Path to Prosperity” Is Just for the Wealthy
April 6, 2011
House Budget Committee Chairman Paul Ryan’s name for his budget — “The Path to Prosperity” — is a cruel joke. One of this nation’s core beliefs is that if you work hard and act responsibly, you can get ahead, raise a family, and have a decent life. That was never more true than in the three decades after World War II, when the path to … -
Ryan’s Cowardly Budget
April 5, 2011
The Center has just issued a statement on House Budget Committee Chairman Paul Ryan’s budget plan and a brief analysis showing that the plan would get about two-thirds of its more than $4 trillion in budget cuts over 10 years from programs that serve people of limited means. . -
Zandi Analyses Show "Democratic" Measures in Tax Cut-UI Deal Boost Economy, "Republican" Measures Add to Deficit Risks
December 22, 2010
As a result of the tax cut-unemployment insurance legislation that President Obama signed into law last week, economic forecasters have substantially upgraded their outlook for 2011 (see the box on page 2). An analysis of the compromise by Mark Zandi, the chief economist for Moody’s Analytics, indicates that this greater optimism stems … -
Business Expensing Proposal Would Add to State Fiscal Problems
Updated December 16, 2010
Notwithstanding the overall positive impacts that the tax deal between President Obama and Republican leaders would have for the economy in the near term, its provision to encourage business investment in machinery and equipment would cost states over $11 billion in state corporate and individual income tax revenues during the … -
Unpacking the Tax Cut-Unemployment Compromise
December 10, 2010
Last night, the Senate released legislative language for the tax cut-unemployment insurance compromise negotiated between President Obama and Congressional Republicans. The Joint Committee on Taxation (JCT) released an official cost estimate for the revenue portions of the bill shortly thereafter. These graphs illustrate the various components … -
Statement: Robert Greenstein, Executive Director, on the Tax Cut-Unemployment Insurance Deal
Updated December 8, 2010
The deal between President Obama and Republican leaders on tax cuts and unemployment insurance has two substantial positive aspects: its surprisingly strong protections for low- and middle-income working families and its stronger-than-expected boost for the economy and jobs. But it … -
Business Expensing Proposal Would Add to State Fiscal Problems
November 11, 2010
View more recent report with more up-to-date data: Business Expensing Proposal Would Add to State Fiscal Problems Updated December 16, 2010 President Obama’s proposed temporary tax incentive to encourage business investment in machinery and equipment would cost states up to $20 billion instate corporate and individual income tax revenues during … -
Boehner Proposal Would Cut Non-Security Discretionary Programs 21 Percent, The Deepest Such Cut in Recent U.S. History
Revised September 15, 2010
House Minority Leader John Boehner on September 8 issued a proposal to cut funding for non-security discretionary programs and to extend all of the Bush tax cuts for two years. He portrayed the proposal as a bipartisan compromise. Closer examination shows, however, that this is a radical plan that reflects deeply conservative … -
Johanns Amendment to Small Business Bill Would Raise Health Insurance Premiums, Increase the Ranks of the Uninsured, and Eliminate Preventive Health Funding
Updated September 13, 2010
The Senate will vote tomorrow, September 14, on an amendment from Senator Mike Johanns (R-NE) to small business legislation that would repeal a provision of the health reform law designed to raise revenue by reducing noncompliance with the nation’s tax laws. [1] While critics have raised legitimate concerns about some of the paperwork … -
High-Income People Would Benefit Significantly From Extension of “Middle-Class” Tax Cuts
August 13, 2010
A fact generally overlooked in the debate over whether Congress should extend the high-income Bush tax cuts — i.e. those targeted exclusively at couples making over $250,000 and single individuals making over $200,000 — is that these households will still receive substantial tax cuts if Congress extends the so-called … -
Extension of High-Income Tax Cuts Would Benefit Few Small Businesses; Jobs Tax Credit Would Be Better
August 3, 2010
Proponents of extending President Bush’s 2001 and 2003 tax cuts for people with incomes over $250,000 argue, in part, that allowing them to expire after 2010 would weaken the economy by hurting small businesses. In reality, however, extending the tax cuts would do little for small business because only the top 3 percent of people with … -
Unlimited Estate Tax Exemption For Farm Estates Is Unnecessary and Likely Harmful
June 29, 2010
Proponents of repealing the estate tax have made farmers, along with small business, the face of their cause, driving some policymakers to push for special preferences for farms in estate tax law. One of the most radical of these proposed changes is an unlimited estate tax exemption for farmland, recently introduced by Rep. Mike Thompson … -
Compromise Provision to Narrow “Carried Interest” Tax Loophole Should Not Be Weakened Further
June 9, 2010
A provision in the jobs bill that the House passed on May 28 would partially close a tax loophole that allows investment fund managers to pay taxes on a large part of their income — their “carried interest” — at the 15 percent capital gains tax rate rather than at normal income tax rates of … -
High-Income Tax Cuts Should Expire on Schedule
April 1, 2010
Allowing the 2001 and 2003 tax cuts for couples making over $250,000 (and singles over $200,000) to expire on schedule on December 31 represents the best course of action for the budget and the economy. Extending those tax cuts for one or two years, as some have proposed, would be highly ill-advised. It would make it much more likely that … -
Testimony: Robert Greenstein Executive Director, Center on Budget and Policy Priorities, on the Need to Implement a Balanced Approach to Addressing the Long-Term Budget Deficits
March 23, 2010
I appreciate the invitation to appear before you today. I am Robert Greenstein, executive director of the Center on Budget and Policy Priorities, a nonprofit policy institute that conducts research and analysis on fiscal policy matters and an array of federal and state programs and policies. My testimony today makes three major … -
Podcast: Testimony of Robert Greenstein on Addressing Long-Term Deficits
March 23, 2010
Executive Director Robert Greenstein discusses the need to implement a balanced approach in addressing the long-term budget deficit in a testimony before the House Ways and Means Subcommittee on Select Revenue Measures.
Duration: 7:49
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With Fully Offset Tax Extender Bill, House Advances Important Fiscal Principle; Senate Should Follow
December 9, 2009
The House tax extender bill represents a step forward in the important effort to reinstate a pay-as-you-go norm to federal legislation — a norm that played a key role in enabling the White House and Congress to turn large deficits into substantial surpluses in the 1990s The nation is on an unsustainable fiscal path, and … -
House Health Bill’s High-Income Surcharge is Sound and Well Targeted
Updated November 23, 2009
A 5.4 percent surcharge on couples with incomes over $1 million, a key financing feature of the House health reform bill, is sound and well targeted. It would affect just a fraction of 1 percent of taxpayers, a group whose incomes have soared and tax burdens have fallen in recent years, and would have only a modest impact on small businesses. … -
House Health Bill’s High-Income Surcharge: A Reasonable Approach
Revised July 30, 2009
Reforming the health care system to provide universal health coverage is an urgent priority. But, facing huge projected budget deficits that have the nation on an unsustainable fiscal path, the White House and Congress must enact a health reform plan that is also fully financed and that reduces the growth rate of health care … -
Limiting the Tax Exclusion for Employer-Sponsored Insurance Can Help Pay for Health Reform
Revised June 4, 2009
Limiting the tax exclusion for employer-sponsored health insurance could provide significant revenues for health reform without eroding employer-sponsored insurance or causing other undesirable side effects — if the cap and the rest of the health reform legislation are well designed and contain several key features that past proposals have lacked. … -
Statement: Chuck Marr, Director of Federal Tax Policy, on the Administration’s International Tax Proposal
May 4, 2009
The Administration’s proposal is a welcome step forward in tax policy because it would make the tax code more balanced, support research and development, and promote fiscal responsibility. Specifically, it would tighten lax international tax rules and … -
History Contradicts Claim That President’s Budget Would Harm Small Business Job Creation
March 26, 2009
Critics have claimed that President Obama’s proposal to roll back tax cuts for families with incomes above $250,000 would kill job growth in the small business sector. But under the Clinton Administration, when the tax treatment of high-income families was very similar to what President Obama has proposed, small businesses … -
Testimony: Robert Greenstein on Tax Proposals in the President's Budget before the Senate Committee on Finance
March 26, 2009
I appreciate the invitation to appear before the Committee today. I am Robert Greenstein, Executive Director of the Center on Budget and Policy Priorities, a policy institute that focuses on fiscal policy issues and issues affecting low- and moderate-income families. This testimony makes the following points: As the Congressional … -
Limiting Itemized Deductions for Upper-Income Taxpayers Would Have Little Effect on Small Business, Charities, Housing
March 12, 2009
Despite persistent claims to the contrary, the President’s proposal to cap the value of itemized deductions at 28 percent would have only small effects on small business, charitable giving, and homeownership. That’s because the proposal, which would save $318 billion over the next ten years to help finance health care reform, would affect only those tax … -
Very Few Small Business Owners Would Face Tax Increases Under President's Budget
February 28, 2009
Some critics of the President’s budget charge that his proposals to roll back tax breaks for taxpayers with incomes over $250,000 would harm small businesses. In fact, only 8.9 percent of people with any small business income have incomes of over $250,000 and, thus, would even potentially be affected by these provisions. (See … -
New Analysis Shows "Tax Expenditures" Overall Are Costly and Regressive
February 23, 2009
“Tax expenditures” for individuals totaled about $760.5 billion in 2007, topping what the federal government spent on either national defense or all non-defense discretionary programs, a new analysis by the Urban Institute-Brookings Institution Tax Policy Center (TPC) shows.[1] In most cases, these tax expenditures are also regressive — that is, they benefit … -
Big Misconceptions about Small Businesses and Taxes
Updated February 2, 2009
Supporters of various tax benefits for high-income households often claim that failure to maintain them would have an undue effect on many small businesses. But even assuming a broad definition of “small business,” such claims are often exaggerated or false. This paper examines three such claims. First, critics … -
The High Cost of Estate Tax Repeal
Revised January 28, 2009
View more up-to-date data: Policy Basics: The Estate Tax June 14, 2010 Making permanent the repeal of the estate tax after 2010 — repeatedly proposed by President Bush— would add almost $1.3 trillion to the deficit between fiscal years 2012 and 2021, the first ten years in which the full costs of extending repeal would be reflected in … -
Putting U.S. Corporate Taxes in Perspective
October 27, 2008
The U.S. corporate tax burden is smaller than average for developed countries.[1] Corporations in 19 of the member states of the Organization for Economic Co-operation and Development paid 16.1 percent of their profits in taxes between 2000 and 2005, on average, while corporations in the United States paid 13.4 percent. … -
Bonus Depreciation Tax Cut Unlikely To Provide Effective Economic Stimulus
September 10, 2008
Stimulus legislation enacted in February included a provision that increased the tax deduction which businesses can claim when they purchase certain types of equipment and place it in service during the 2008 tax year. Suggestions are being made that this “bonus depreciation” provision — a form of accelerated … -
Evidence Shows That Tax Cuts Lose Revenue
Revised July 21, 2008
The claim that tax cuts “pay for themselves” — i.e., cause so much economic growth that revenues rise faster than they would have without the tax cut — has been made repeatedly in recent years and is one of the many tax policy issues that is likely to receive renewed attention in light of the upcoming … -
House-Passed Housing Tax Package Improves Significantly on Senate Version: But Addressing the Foreclosure Crisis Will Require Other Measures
Revised June 17, 2008
On April 10, the Senate passed a bill comprised largely of housing-related tax cuts. [1] Six weeks later, the House passed its own housing legislation including its own package of housing-related tax measures. Some of the provisions in House-passed housing tax package have merit, and the House-passed tax package represents a … -
Well-Designed, Fiscally Responsible Corporate Tax Reform Could Benefit the Economy: Unpaid-For Rate Cuts Would Likely Hurt Most Americans in the Long Run
June 4, 2008
Over the past year, proposals for federal corporate tax cuts and corporate tax reform have received increasing attention. The corporate income tax appears to have joined the long list of tax issues likely to be addressed, or at least debated, over the next few years. Already, two different approaches have emerged. In … -
Senate Housing Legislation Highly Disappointing: Less Than One-Fourth of Cost of Senate Bill Goes for Provisions That Will Actually Help Address the Foreclosure Crisis
Revised May 12, 2008
On April 10, the Senate passed legislation that its supporters say will help struggling families hold on to their homes and assist the communities hit hardest by the foreclosure crisis. Measures that would help achieve these goals, however, account for less than one-fourth of the bill’s cost. The remainder of the cost comes … -
Tax Cuts: Myths and Realities
Updated May 9, 2008
Since 2001, the Administration and Congress have enacted a wide array of tax cuts, including reductions in individual income tax rates, repeal of the estate tax, and reductions in capital gains and dividend taxes. Nearly all of these tax cuts are scheduled to expire by the end of 2010. Making them permanent would cost about $4.4 trillion over the next decade (when the cost of … -
Net Operating Loss Measure under Consideration In Senate Has Low Bang-For-The-Buck As Stimulus: No Justification for Waiving PAYGO for the Provision
February 26, 2008
According to news accounts, the Senate will soon consider a housing stimulus package (S. 2636), introduced by Senator Reid earlier this month.[1] While the package primarily targets the housing market, it also includes a measure dealing with business net operating losses. A business experiences a “net operating … -
The Dubious Priorities of the President's FY 2009 Budget
Revised February 7, 2008
The President’s budget would provide more tax cuts heavily skewed to the most well-off while cutting vital services for low- and moderate-income Americans, generating large deficits, and increasing the strain on states already confronting budget problems as a result of the economic downturn. The budget … -
Repatriation Measure Unlikely to Stimulate the U.S. Economy or Boost U.S. Investment — But Will Promote Investment in Tax Havens and Undermine the Corporate Income Tax
January 30, 2008
When the Senate Finance Committee considers stimulus legislation today, Senator John Ensign is expected to offer an amendment dealing with repatriated foreign earnings. Modeled on a provision included in the 2004 American Jobs Creation Act, Senator Ensign’s amendment would create a tax holiday during which repatriated … -
Myths and Realities About Changing the Tax Treatment of Private Equity Fund Managers
November 8, 2007
Economists across the political system generally concur that eliminating the tax break for “carried interest” income, a form of compensation received by private equity fund managers, would improve the equity and efficiency of the tax system.[1] The tax code is more efficient when it creates a level playing field. The fact that carried interest income is taxed at the … -
Higher Taxes on Carried Interest Would Be Borne By Investment Fund Managers
September 19, 2007
In the past few weeks, the Senate Finance and the House Ways and Means Committee have both held hearings investigating the tax treatment of carried interest, a form of compensation prevalent in the private equity industry. As part of their contractual arrangement with investors, the managers of a private equity fund typically … -
Making the “Internet Tax Freedom Act” Permanent Could Lead to a Substantial Revenue Loss for States and Localities
Revised August 30, 2007
On May 23 and July 26, 2007, the Senate Commerce Committee and the Subcommittee on Commercial and Administrative Law of the House Judiciary Committee, respectively, held hearings on the “Internet Tax Freedom Act” (ITFA). ITFA was enacted in 1998 and renewed in 2001 and 2004. The law generally bars state and local taxation … -
The 2001 and 2003 Tax Cuts and Small Business
March 21, 2007
The Bush Administration and Congressional supporters of the 2001 and 2003 tax cuts have often asserted that these tax cuts, and especially the reductions in the top two income tax rates, are of great value to small business. They argue that failure to extend these tax cuts would cause significant harm to small business owners. An examination of the relevant data demonstrates, … -
"Small Business" Tax Package in Senate Minimum Wage Bill Poses Fiscal Risks
February 27, 2007
On February 1, the Senate passed a minimum wage bill that includes a package of business tax cuts. The cost of these tax cuts is $8.3 billion over the ten years from 2007 to 2016. On February 16, the House of Representatives passed a much smaller package of business tax cuts, the cost of which is $1.5 billion between 2007 and 2016 (and $1.3 billion between 2007 and 2017[1]). … -
House Proposal to Reform Earmarks Employs Double Standard, Largely Exempting Earmarks Packaged as Special Interest Tax Breaks
September 14, 2006
The House is about to consider a change in its rules that would require any committee that includes an “earmark” in legislation to report the name of the Member who sponsored the earmark.[1] One aspect of this proposal jumps out: while earmarked funding would be subject to this rule, earmarked special-interest tax breaks would be exempt from the rule, except for tax breaks that … -
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, … -
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.… -
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 … -
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. … -
New Joint Committee on Taxation Estimates of Estate Tax Repeal Show Slightly Higher Costs
June 9, 2006
The Joint Committee on Taxation this week released new estimates of the cost of making permanent the repeal of the estate tax after 2010. These estimates of the cost of H.R. 8, the measure that passed the House last year (and that the Senate voted on June 8 not to consider), show that permanent repeal would cost $386.5 billion between 2007 and 2016.… -
Estate Tax Repeal Would Decrease National Saving
June 8, 2006
Repeal of the estate tax would add about $1 trillion to federal deficits over the first decade in which its costs would be fully felt (2012-2021). These higher deficits would reduce national savings, with the consequence that, in the long run, estate tax repeal would have at best negligible, and possibly negative, effects on the economy. Surprisingly, … -
Estate Tax Repeal — or Slashing The Estate Tax Rate — Would Substantially Reduce Charitable Giving
June 7, 2006
Repealing the estate tax would substantially reduce U.S. charitable giving, according to research by the Congressional Budget Office and various economists. As CBO’s study explains, the estate tax creates powerful incentives for affluent individuals to donate to charity. Since donations made both during life and at death reduce the size of an estate and thus the amount subject … -
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 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.… -
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 … -
House Leadership Seeks To Invoke "Martial Law," Forcing Members To Vote On Key Budget Bills Without Full Knowledge Of What They Are Voting On
December 18, 2005
The House Republican Leadership has announced its intention to have the House vote today on conference reports on a budget-cut “reconciliation” bill (S. 1932) and the defense appropriation bill (H.R. 2863) under a procedure known as “martial law.” The … -
Temporary Provisions in the Corporate Tax Bill Mask Its Likely Long-Term Impact on the Deficit
October 7, 2004
The conference committee chaired by House Ways and Means Chair Bill Thomas completed work on the corporate tax bill on October 6, and the House and Senate are expected to vote on the measure before adjourning this week. The bill would take the positive step of repealing … -
The Anticipated Corporate Tax Package: Watch Out For Gimmicks and Giveaways
October 4, 2004
A Congressional conference committee, chaired by House Ways and Means Chairman Bill Thomas, is scheduled to meet late on October 4 to finalize a package of corporate tax changes. The package will raise revenue primarily by repealing an export subsidy that the World Trade Organization has ruled to be illegal, closing some … -
Fact Sheet: Corporate Tax Revenues At Historic Lows Even Before Proposed Costly New Tax Breaks
Revised October 24, 2003
A new Center report, The Decline of Corporate Income Tax Revenues, provides context for the debate over corporate tax-cut legislation now before Congress. It shows that corporate tax revenues have fallen to historically low levels as a share of total federal revenues and of the economy. Despite the weakening of …
