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House Health Bill’s High-Income Surcharge is Sound and Well Targeted
Updated November 20, 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. … -
Increasing Medicare Tax on High-Wage Earners Could Help Pay for Health Reform and Strengthen Medicare’s Finances
November 13, 2009
Increasing the Medicare payroll tax on high-wage earners would represent a sound and well-targeted way of paying for health reform. It would also improve the solvency of Medicare’s Hospital Insurance (HI) trust fund and thereby strengthen this critical program, which provides health coverage for 46 million seniors and persons with disabilities. … -
Policy Basics: The Child Tax Credit
November 11, 2009
The Child Tax Credit, designed to help offset the cost of raising children, is worth up to $1,000 per child. Taxpayers eligible for the credit subtract it from the total amount of federal income taxes they would otherwise owe. For example, if a couple with two children would owe $5,000 in … -
Coalition Makes Flawed Arguments Against Proposal to Help Finance Health Reform by Maintaining Current Value of Itemized Deductions for Wealthy Households
Revised October 13, 2009
A coalition consisting of several trade associations for foundations and some nonprofit organizations along with a number of large charities has raised objections to a proposal that would help finance improved health coverage for low- and moderate-income people by maintaining the value of itemized deductions for wealthy Americans at its current … -
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 … -
Curbing Flexible Spending Accounts Could Help Pay For Health Care Reform
Revised June 10, 2009
Congress should consider scaling back or eliminating health care flexible spending accounts (FSAs) [1] as part of its effort to pay for health care reform. This paper, which is part of a series of papers on proposals to help pay for health reform, outlines several ways in which Congress could curtail FSAs. FSAs are designed to allow employees to pay … -
Maintaining Current Value of Itemized Deductions For High-Income Taxpayers Could Help Pay For Health Care Reform
June 10, 2009
If Congress rejects the President’s proposal to help pay for health care reform by limiting the value of itemized deductions for high-income filers, it should at least prevent those subsidies from expanding in 2011, as they would under current law. Simply keeping the value of itemized deductions for filers in the top two brackets at … -
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. … -
Video: Robert Greenstein Discusses the President's Budget on Washington Journal
May 8, 2009
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A Brief Analysis of the Congressional Budget Plan
May 4, 2009
The budget resolution Congress adopted last week for fiscal year 2010[1] largely reflects the proposals in the preliminary budget President Obama submitted to Congress in February. Under the budget resolution: Deficits will be very high by historical standards in the next several years … -
Federal Tax Burdens for Most Near Their Lowest Levels in Decades
Updated April 14, 2009
With April 15 approaching and many people focusing on what they owe in taxes, Americans may be surprised to learn that federal tax burdens for most income groups, particularly middle-income households, are near their lowest levels in decades — and were low by historical standards even before the 2001 and 2003 tax cuts. Most income … -
House Republican Budget Would Aid Wealthy Individuals and Corporations, Cut Public Services, Slow Economic Recovery
April 2, 2009
The House Republican budget, introduced April 1 by Rep. Paul Ryan (R-WI), calls for a massive transfer of resources from the broad majority of Americans to the nation’s wealthiest individuals and corporations.[1] It provides the richest households with a new round of very costly tax reductions by extending the Bush high-income tax cuts and adding another set of tax cuts that … -
An Analysis of the House and Senate Budget Plans
April 1, 2009
The congressional budget resolutions that the House and Senate are considering this week are essentially consistent with the budget blueprint that President Obama submitted to the Congress in February.[1] The President’s budget and the House and Senate plans (which their … -
Proposal to Cap Deductions for High-Income Households Would Reduce Charitable Contributions by Only 1.9 Percent
Revised March 31, 2009
The President’s 2010 budget proposes to limit the tax subsidy for deductible expenses of the most affluent Americans and to use the additional revenue to help finance national health reform, including universal coverage. This proposal has been attacked on the grounds that it would lead to substantial reductions in charitable contributions and hit … -
Tax Foundation Figures Do Not Represent Typical Households’ Tax Burdens
March 31, 2009
Each year, the Tax Foundation releases a report projecting “Tax Freedom Day,” which it describes as the day when Americans will have “earned enough money to pay this year’s tax obligations at the federal, state, and local levels.” [1] The Tax Foundation’s “Tax … -
High-Income Households Would Face Lower Tax Burden under Obama Budget than In Clinton Years, When Economy Performed Well
March 26, 2009
Despite claims that President Obama would impose a massive, damaging tax increase on wealthy Americans, the top 1 percent of Americans would actually pay a slightly smaller share of their income in federal taxes under the President’s proposals than during the Clinton Administration, when the economy grew strongly. Specifically, the top … -
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 … -
Policy Basics: The 2001 and 2003 Tax Cuts
March 5, 2009
The biggest changes in tax policy enacted under President George W. Bush were the 2001 and 2003 tax cuts, often referred to as the “Bush tax cuts” but formally named the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of … -
Podcast: Examining the Administration's 2010 Budget
February 27, 2009
This podcast discusses the President’s budget outline for fiscal year 2010.
Robert Greenstein discusses the priorities in the budget, as well as specific initiatives in major areas such as health care, taxes, and climate change. They also examine the budget’s implications for the federal deficit and debt and fiscal responsibility, and evaluate whether the budget’s numbers are honest or rely on gimmicks.
Duration: 20:54
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Tax Aid in Recovery Package Would Reach Large Numbers of Workers in Every State
Updated February 26, 2009
Tax credits in the economic recovery package provide tax relief to most workers. The centerpiece of the tax relief is a new Making Work Pay Credit of up to $400 per worker. The credit phases in at the same rate as Social Security taxes and is available to all workers (except those claimed as another taxpayer's dependent) earning up to $95,000 and … -
American Recovery and Reinvestment Act of 2009: State-By-State Estimates of Key Provisions Affecting Low- and Moderate-Income Individuals
Updated February 25, 2009
The American Recovery and Reinvestment Act of 2009 is designed to boost employment and the economy. It contains a number of spending and tax measures crafted to inject more aggregate demand into the sagging economy. This paper provides state-by-state estimates for a number of the major spending and tax provisions that will affect low- and … -
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 … -
Recovery Agreement Temporarily Expands Child Tax Credit for Large Numbers of Children in Every State
February 12, 2009
The economic recovery plan that a congressional conference committee has approved will expand the Child Tax Credit for 13 million children in low-income working families. Under the agreement, the child credit will reach 2.9 million new children and will provide another 10 million children with a larger credit than they would have received … -
Senate Changes Make Recovery Package Less Effective
February 10, 2009
The Senate today passed a version of the American Recovery and Reinvestment Act (H.R. 1) that makes a number of changes in the House-passed bill. Contrary to their proponents' claim, these changes — in Senate committees and on the floor last week, as well as by a group of Senators led by Ben Nelson and Susan Collins — have reduced … -
The High Cost of Estate Tax Repeal
Revised January 28, 2009
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 the budget. This cost includes $1 trillion of lost revenues … -
Child Tax Credit Expansion Passed by Congress Will Help 13 Million Children
Updated December 5, 2008
A recently enacted Child Tax Credit provision will benefit 12.9 million children — 2.4 million who will become newly eligible for the benefit and 10.5 million who will see their credit increased because of it — according to the Urban Institute-Brookings Institution Tax Policy Center. These almost 13 million children come from families with parents who … -
How Projected Surpluses Became Deficits
September 12, 2008
The federal budget is projected to run a $546 billion deficit in 2009, compared with the $710 billion surplus that budget experts projected for 2009 back when President Bush took office nearly eight years ago. This $1.3 trillion deterioration in the nation’s fiscal finances for 2009 can be seen by comparing estimates that the … -
How Robust Was the 2001-2007 Economic Expansion?
Updated August 29, 2008
Proponents of the 2001 and 2003 tax cuts often argue that the economic and employment growth of the past several years establishes that these tax cuts “worked” and had strong beneficial effects. More recently, some have also argued that, with growth slowing, new tax cuts are needed and would reinvigorate the economy. It now appears likely that the economic expansion that … -
Only a Few of the 2001 and 2003 Tax Cut Provisions Benefit Families with Modest Incomes: But a Superficial Treasury Analysis Obscures this Fact
August 7, 2008
A recent Treasury Department release, “Tax Relief in 2001 Through 2011,” shows the reduction in taxes that four hypothetical families with modest incomes are receiving as a result of “legislation enacted during the President’s term in office.”[1] The implication of the release is that the 2001 and 2003 … -
Smaller Deficit Estimate No Surprise: New OMB Estimates Do Not Support Claims About Tax Cuts
Revised July 13, 2008
The Office of Management and Budget today released a report estimating that revenues for the current fiscal year will be higher, and the deficit lower, than the administration and the Congressional Budget Office projected five months ago. OMB now estimates that the deficit for fiscal year 2007 will be $205 billion, down from the $244 billion estimate in the President’s budget in … -
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 … -
Claims That a Modest Tax Surcharge on Millionaires Would Damage Small Businesses and the Economy Do Not Withstand Scrutiny
Revised May 22, 2008
Supplemental appropriations legislation that the House of Representatives approved last week (H.R. 2642) would impose a modest income tax surcharge on couples with adjusted gross income above $1 million (and singles with AGI above $500,000) to fund an expansion of higher education benefits for veterans.[1] The surcharge would be … -
Improving the Refundable Child Tax Credit
Revised May 19, 2008
Because of their potential impact in reducing child poverty and hardship, proposals to improve the refundable Child Tax Credit have garnered significant bipartisan support. In the Senate, Olympia Snowe (R-ME) and Blanche Lincoln (D-AR) have introduced legislation that would begin to address key flaws in the credit's structure. 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 … -
Joint Tax Committee Estimate Shows That Tax Gimmick Being Designed To Evade Senate Budget Rules Would Increase Long-Term Deficits
Revised April 26, 2008
House and Senate conferees negotiating an agreement on the tax reconciliation bill are widely reported to have decided to use a change in Roth IRAs to help “offset” the cost of capital gains and dividend tax cuts in years after 2010. If the tax reconciliation bill increases the deficit after 2010, it would violate a Senate rule that a … -
Tax Foundation Figures Do Not Represent Typical Households' Tax Burdens: Figures May Mislead Policymakers, Journalists, and the Public
April 23, 2008
Each year, the Tax Foundation releases a report projecting “Tax Freedom Day,” which it describes as the day when Americans will have “earned enough money to pay this year’s tax obligations at the federal, state, and local levels.”[1] The Tax Foundation’s “Tax Freedom Day” report is plagued by two major problems. First, its … -
Long-Term Social Security Shortfall Smaller Than Cost of Extending Tax Cuts for Top 1 Percent
March 31, 2008
The Social Security trustees’ report issued this week estimates that Social Security faces a total shortfall over the next 75 years of 0.56 percent of Gross Domestic Product (GDP). This is slightly less than the estimated cost over that same period of extending the 2001 and 2003 tax cuts just for the top 1 percent of … -
Extending the President's Tax Cuts and AMT Relief Would Cost $4.4 Trillion Through 2018
Revised March 28, 2008
President Bush continues to urge that the tax cuts enacted in 2001 and 2003 be made permanent. Despite the severe long-term budget shortfalls the nation faces, the Administration has not proposed measures to offset the cost of extending these tax cuts. Nor has it proposed measures to pay for extending relief from the … -
The Skewed Benefits of the Tax Cuts: With the Tax Cuts Extended, Top 1 Percent of Households Would Receive Almost $1.2 Trillion in Tax Benefits Over the Next Decade
Revised March 28, 2008
Under current law, nearly all provisions of the 2001 and 2003 tax cuts are scheduled to expire at the end of 2010. The President’s budget calls for making these tax cuts permanent. The enacted tax cuts and their extension carry a high cost. This raises the question: how would the large sums involved be … -
Capital Gains Tax Cuts Slashed Taxes of Top 400, While Their Incomes SoaredCapital Gains Tax Cuts Slashed Taxes of Top 400, While Their Incomes Soared
March 27, 2008
New Internal Revenue Service (IRS) data show that the 400 U.S. taxpayers with the very highest incomes pay only 18 percent of their income, on average, in federal individual income taxes. The data, published by the Wall Street Journal and the Urban-Brookings Tax Policy Center, provide detailed income and tax information for the 400 tax filers with the highest adjusted gross incomes (AGI) in … -
Have the 2001 and 2003 Tax Cuts Made the Tax Code More Progressive?
March 11, 2008
Supporters of extending the 2001 and 2003 tax cuts claim that these tax cuts’ benefits have been broadly and fairly distributed. Some argue that the tax cuts have actually made the tax system more progressive, pointing to Congressional Budget Office (CBO) data showing that the share of total federal … -
Claim That Congressional Budget Plans Call for "Largest Tax Increase in History" is Inaccurate
March 7, 2008
Some are claiming that the budget plans adopted this week by the House and Senate Budget Committees — the full House and Senate are scheduled to consider their respective committee’s plan next week — would constitute “the largest tax increase in history.” This … -
Fact Sheet: The “Mother of All Distortions” - Attacks on Rangel AMT Plan Not Based On Reality
February 13, 2008
Republican congressional leaders have sharply attacked House Ways and Means Chairman Rangel’s proposal to replace the Alternative Minimum Tax with a tax surcharge for very-high-income households as a massive tax increase that would seriously damage, even “doom,” the economy. In fact, however, the Rangel plan … -
The Rangel AMT Proposal Versus Unpaid-For Repeal of the AMT: Which Is Better Tax Reform?
February 13, 2008
Last fall, House Ways and Means Committee Chairman Charles Rangel introduced major tax legislation (H.R. 3970) that would repeal the Alternative Minimum Tax and finance repeal by imposing an income tax surcharge on high-income households. The package also includes expansions of the Earned Income Tax Credit, refundable Child … -
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 … -
Senate Rebate Proposal Targets More Funds to Low-Income Households, Boosting Stimulus Impact: Lifting Income Cap Reduces Bang-for-the-Buck, But Changes Are an Improvement Overall
Revised February 1, 2008
The stimulus legislation that was adopted by the Senate Finance Committee on Wednesday would make several changes to the House-passed stimulus package, including significant changes to the tax rebate proposal that on balance would make the rebate more effective as stimulus. While retaining the House rebate’s basic structure, the Finance … -
Senate Action Will Not Delay Rebates
January 31, 2008
The facts are clear: Senate action on the stimulus package will not delay the rebates by a single day. The earliest that the IRS can begin to send out rebates is mid-May. No matter how fast Congress enacts the stimulus package, the IRS cannot start issuing the rebates any sooner because it must first process the 2007 … -
President's Expected Push to Make Tax Cuts Permanent is Irresponsible Fiscal and Economic Policy
January 28, 2008
In his State of the Union address this evening, President Bush is expected to renew his push to make his signature tax cuts permanent. In recent weeks, Administration officials have offered three major arguments for this policy — (1) the tax cuts yielded strong economic growth over the past few years, (2) extending them … -
An Analysis Of The Rebate Proposal In The Announced Stimulus Deal
January 25, 2008
The centerpiece of the stimulus deal announced yesterday by House Speaker Nancy Pelosi, House Minority Leader John Boehner, and Treasury Secretary Henry Paulson is a proposal to send rebate checks to 117 million U.S. households. The structure of the proposed rebate, while not ideal from a stimulus standpoint, is far superior to the … -
Tax Policy Center Estimates Show Fewer Than 60 Percent of Working Households Would Benefit In Full From President’s Proposed Rebate
January 22, 2008
The centerpiece of the President’s economic stimulus proposal reportedly is a tax rebate that would be provided by temporarily reducing the 10 percent income tax rate to zero. The plan has been described as featuring a rebate of $800 for individuals and $1,600 for couples. This description, however, is misleading. Only those … -
Another Misdiagnosis: Marginal Rate Reductions and Extensions of Tax Cuts Expiring in 2010 Not the Right Medicine for the Economy’s Current Ills
January 15, 2008
Six months ago, the economy was growing steadily, and the President gave an address in which he claimed that the 2001 and 2003 tax cuts had brought about strong economic growth and should be made permanent to ensure strong growth over the long run.[1] Prominent conservatives recommended a corporate rate cut to make U.S. businesses … -
The Four Pieces of Effective Fiscal Stimulus
January 14, 2008
Recent evidence that the economy has weakened significantly has sparked discussion of possible fiscal stimulus measures. To be effective, such measures must be timely, targeted, and temporary. Timely measures are those that, once triggered, stimulate new spending quickly so that … -
Principles for Fiscal Stimulus Economic Policy in a Weakening Economy
Revised January 11, 2008
The weak December jobs report that the Labor Department issued January 4 is the latest evidence the economy has weakened significantly and is now growing quite slowly. A number of economists continue to believe this slow growth will continue into 2008, but that the economy will avoid slipping into a recession.[1] Some … -
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 … -
House AMT "Patch" Bill is Fiscally Responsible
November 7, 2007
Later this week, the House of Representatives is expected to vote on legislation that would “patch” the Alternative Minimum Tax for 2007 (H.R. 3996). This analysis highlights three praiseworthy features of the tax package, which was adopted by the Ways and Means Committee November 1. The cost of the package is fully offset. Its adoption by the … -
Ways and Means Committee Chairman Charles Rangel's Proposed Expansion of the EITC for Childless Workers
October 25, 2007
The tax reform plan released today by Ways and Means Committee Chairman Charles Rangel includes a sizable increase in the component of the Earned Income Tax Credit available to low-income working adults who are not raising minor children. Senators Barack Obama, Evan Bayh, and John Kerry and Representatives Bill Pascrell, John Yarmuth, and Keith … -
Ensign Amendment Would Undercut Immigration Bill Goals by Imposing Unaffordable Tax Burdens on Many Immigrants
Revised September 28, 2007
An amendment to the Senate immigration bill filed by Senator John Ensign (R-NV) would prevent undocumented workers who are paying back taxes as part of legalizing their status from claiming the tax credits available to all other tax filers. It would also deny these workers any tax refunds the IRS might owe them because of overwithholding. As a result, undocumented workers seeking to … -
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 … -
The Internet Tax Freedom Act and the "Digital Divide"
September 10, 2007
Congress is again considering whether to make the “Internet Tax Freedom Act” (ITFA) permanent. Enacted in 1998 and temporarily renewed in 2001 and 2004, ITFA banned new state and local taxes on “Internet access” services. States and localities were barred from imposing their sales taxes on the typical $10 to $50 monthly fee … -
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 … -
Historical Averages Not a Meaningful Benchmark for Future Revenues
August 22, 2007
The “Mid-Session Review” that the Office of Management and Budget issued last month projects that revenues will be slightly above their 30-year average in 2007, measured as a share of the economy. The Administration and many of its supporters have cited this fact as evidence that current tax policies are generating an … -
Administration’s Proposed Tax Deduction for Health Insurance Seriously Flawed
July 31, 2007
In an attempt to revive its proposal to establish a new standard tax deduction for the purchase of health insurance, the Administration has injected the proposal into the congressional debate over renewing and strengthening the State Children’s Health Insurance Program (SCHIP). The Administration has threatened to veto the … -
An Analysis of the "Carried Interest" Controversy
July 31, 2007
This week, the Senate Finance Committee is scheduled to hold a second hearing on the tax treatment of “carried interest.” A carried interest is a right to receive a specified share (often 20 percent) of the profits ultimately earned by an investment fund without contributing a corresponding share of the fund’s financial capital. It is part of the standard … -
Would Tax Incentives Be an Effective Way to Expand Health Coverage for Low-Income Children and Families?
July 31, 2007
In recent weeks, the Administration has threatened to veto legislation in Congress that would reauthorize the SCHIP program and extend health coverage to several million uninsured children. As an alternative, the Administration has touted the virtues of the private insurance market and attempted to revive consideration of its proposal to … -
The Effects of the Capital Gains and Dividend Tax Cuts On the Economy and Revenues
Revised July 12, 2007
With the fourth anniversary of the 2003 capital gains and dividend tax cuts just past and the Office of Management and Budget’s Mid-Session Review released today, supporters of making these tax cuts permanent are reiterating their claim that the tax cuts boosted the economy and increased federal revenues. For example, a release from the Senate Republican Policy Committee contends … -
Analysis of Sessions Amendment to Deny the EITC to People Working Here Legally as a Result of the Senate Immigration Bill (Amendment # 1234)
Revised June 7, 2007
The Senate yesterday adopted an amendment to the Senate immigration bill offered by Senator Jeff Sessions (R-AL). Undocumented immigrants already are ineligible for the EITC. The Sessions amendment would deny this important tax credit to low-income workers who have legal status.[1] This approach is inequitable and unwise. It … -
Analysis of Sessions Amendment to Deny the Eitc to Many Legal Permanent Residents (Amendment # 1235)
June 6, 2007
Senator Sessions has filed an amendment to the Senate immigration bill that would deny the Earned Income Tax Credit to hundreds of thousands of taxpayers already working in the country legally. Under the amendment, legal permanent residents — often called “green card” holders — would be ineligible for the EITC for the … -
A Significant Number of Students in Every State Are Shut Out of Federal Higher Education Tax Credits
June 1, 2007
As early as next week, the Senate Finance Committee is expected to vote on legislation restructuring the higher education tax credits. The federal tax code includes two tax credits that offset tuition costs for students enrolled in higher education: the Hope Credit, worth up to $1,650, and the Lifetime Learning Credit, worth up … -
Making Higher Education Tax Credits More Available To Low- And Moderate-Income Students: How and Why
May 10, 2007
Senate Finance Committee Chairman Max Baucus has indicated that his committee will soon mark up education tax incentives. In addressing this issue, the Finance Committee should start by considering how to improve the existing tax credits for higher education. In particular, it should consider reforms that … -
Alternative Approaches to AMT Reform
Revised April 30, 2007
The Subcommittee on Select Revenue Measures of the House Ways and Means Committee recently held hearings on the Alternative Minimum Tax, and Subcommittee Chairman Richard Neal has said he is developing a proposal for permanent, revenue-neutral AMT reform. According to news accounts, the proposal will take the form of an AMT … -
What the 2007 Trustees' Report Shows about Social Security
April 24, 2007
Executive Summary On April 23, the Social Security Board of Trustees released the 67th annual report on the program’s financial and actuarial status. The report projects that Social Security’s trust fund reserves will be exhausted in 2041, one year later than in last year’s projection. In 2041, Social Security will be … -
Op-Ed: Are Americans Overtaxed?
April 17, 2007
No one likes paying taxes – least of all Americans. But, despite well-worn assertions to the contrary, Americans are not paying too much – at least not by historical standards, not compared to other developed countries, and most importantly, not in light of the revenues needed to maintain the size of government that … -
CBO Provides New Evidence That the 2001 And 2003 Tax Cuts Have Only Modest Economic Effects and Do Not Pay For Themselves
April 13, 2007
A new analysis by the Congressional Budget Office finds that extending the 2001 and 2003 tax cuts could result in a modest increase in the number of hours that people work. However, any “dynamic” revenue gains associated with the resulting increase in wages and salaries would pale in comparison with the cost of extending the tax cuts. Those … -
New Study Finds "Dramatic" Reduction Since 1960 In The Progressivity of the Federal Tax System
March 29, 2007
In a new study, Thomas Piketty and Emmanuel Saez, economists who have done groundbreaking work on the historical evolution of income inequality in the United States, examine how the progressivity of the federal tax system has changed over time.[1] Unlike previous analyses, theirs examines effective federal tax rates going back to 1960, including income, payroll, corporate, … -
Have the 2001 and 2003 Tax Cuts Made The Tax Code More Progressive?
March 19, 2007
With debate beginning on the Senate budget resolution, congressional supporters of the 2001 and 2003 tax cuts have begun recycling old arguments for extending all of these tax cuts. Among these is the claim that the tax cuts have made the tax code more progressive. The reality is that the tax cuts have made the tax code more regressive. A progressive tax code is one that makes the … -
Why The Cost of AMT Relief Should Be Included in Estimates of the Cost of Extending the President's Tax Cuts
Revised February 20, 2007
The President’s budget estimates that extending the 2001 and 2003 tax cuts would cost $1.7 trillion over the next decade (2008-2017). (A figure of $1.6 trillion has been cited by a number of media outlets, but this number leaves out the increased outlays that will result from extending the refundable tax credit expansions enacted in 2001; the Administration’s estimate of the … -
Myths and Realities About the Alternative Minimum Tax
February 14, 2007
The Alternative Minimum Tax was created in 1969 to ensure that the highest-income households could not exploit loopholes, exclusions, and deductions to avoid paying any federal income tax. The AMT acts as a stop-gap tax system, with taxpayers owing their regular income tax or AMT liability, whichever is higher. Because … -
Revenue Losses from Repeal of the Alternative Minimum Tax Are Staggering
Revised February 1, 2007
As is increasingly well known, a growing number of taxpayers will become subject to the Alternative Minimum Tax over the next ten years if relief from the tax (which has been provided by Congress on a year-to-year basis) is not extended. A growing fraction of those affected by the AMT will be middle- or upper-middle class families. The Urban … -
Two High Income Tax Cuts Not Yet Fully in Effect Will Cost Billions Over the Next Five Years Freezing the Tax Cuts at 2007 Levels Would Yield Significant Savings
February 1, 2007
On January 5, the House of Representatives voted to reinstate the “Pay-As-You-Go” (PAYGO) budgeting rule, and Democratic leaders have promised that the Senate will follow suit. Because PAYGO requires that legislation that increases entitlement spending or reduces revenues be paid for, the rule increases the need to find offsets to pay for high priority legislation and to … -
Testimony of Robert Greenstein on Economic Security and Long-term Budget Projections
January 30, 2007
I appreciate the invitation to appear before you today. I direct the Center on Budget and Policy Priorities, a nonprofit policy institute that conducts research and analysis on fiscal policy matters, as well as on programs and policies for low-income families and individuals. Last winter, the Center was asked by the Carnegie Roundtable on Economic … -
The Long-Term Fiscal Outlook Is Bleak
January 29, 2007
In 2006, the federal government ran a deficit of $248 billion, or about 2 percent of the economy. Deficits are projected to average about 2 percent of GDP over the next ten years, assuming the 2001 and 2003 tax cuts are extended. After that, the fiscal situation is expected to deteriorate markedly. In this analysis, we present new projections for the … -
If You're Going to Do Social Policy Through the Tax Code, Do it Right
January 24, 2007
The most contentious issues in tax policy are not going to be settled in the next two years. President Bush and the Democratic Congress are unlikely to come to a sustainable, long-term agreement on the level of revenue — debates on extending the tax cuts or letting some of them expire are likely a matter for the next president and the next Congress. … -
New CBO Report Shows Only Modest Fiscal Improvement
January 24, 2007
Several key findings and conclusions emerge from the new Congressional Budget Office report on the budget and the economy issued today.[1] The CBO report shows significant improvement in the ten-year budget outlook, but the improvement is not nearly as large as a casual reader of the report might think. Part of what appears to be an … -
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 … -
Treasury Dynamic Scoring Analysis Refutes Claims by Supporters of the Tax Cuts
Revised August 24, 2006
On July 25, the Treasury Department released a study entitled “A Dynamic Analysis of Permanent Extension of the President’s Tax Relief.” This study refutes many of the exaggerated claims about the tax cuts that have been made by the President and other senior Administration officials, the Wall Street Journal editorial page, and various other tax-cut advocates. … -
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 … -
Putting Their Cards on the Table: Senate Budget Bill Indicates Intention to Pay for Tax Cuts by Sweeping Cuts in Programs for Middle- and Low-Income Households
August 2, 2006
The tax cuts enacted since 2001 have been financed through borrowing — that is, through higher deficits. The sharp estate-tax cut that was approved by the House of Representatives on July 29 and is about to be considered in the Senate would be deficit financed, as well. A new Treasury Department analysis issued on July 25 acknowledges, … -
Pension Conference Agreement Makes Retirement Tax Cuts Permanent But Fails To Offset Their Cost
Revised July 31, 2006
The conference agreement on pension legislation would make permanent provisions enacted in the 2001 tax-cut law to expand tax-preferred retirement and education savings accounts. The conference agreement makes these tax cuts permanent without offsetting their cost. According to Joint Committee on Taxation estimates, making these tax cuts permanent would cost $52.6 billion between 2007 and … -
Statement Robert Greenstein on Pension Conference Agreement
Revised July 31, 2006
The pension conference agreement announced today includes the permanent extension of provisions enacted in 2001 that expand tax-preferred retirement and education savings accounts. But the conference agreement includes no offsets to pay for the cost of these tax cuts. It uses deficit … -
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, … -
Claim That Tax Cuts "Pay For Themselves" Is Too Good To Be True
Revised July 26, 2006
In recent statements, the President, the Vice President, and key Congressional leaders have asserted that the increase in revenues in 2005 and the increase now projected for 2006 prove that tax cuts “pay for themselves.” In other words, the economy expands so much as a result of tax cuts that it produces the same level of revenue as it would have … -
Do Revenue Surprises Tell Us Much about The Cost of Tax Cuts?
July 18, 2006
The best answer to the question posed by the title of this paper is probably “no,” revenue surprises do not tell us much about the cost of tax cuts. The reason is that revenues are extremely volatile and move up and down in response to a variety of factors that have nothing to do with tax policy. Indeed, the impacts on revenue levels … -
Pension Bill Conference Report May Make Some 2001 Tax Cuts Permanent without Offsetting Their Costs
July 17, 2006
Pension legislation passed by the House late last year included provisions that would make permanent the higher contribution limits for tax-preferred retirement savings accounts enacted in 2001. The pension bill conferees reportedly are considering including these provisions in the pension bill conference report, without offsetting their cost. … -
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 … -
A Smoking Gun: President's Claim That Tax Cuts Pay For Themselves Refuted by Administration's Own Analysis
July 11, 2006
In remarks on July 11 touting revised deficit projections in the Mid-Session Review of the Budget, President Bush once again claimed that tax cuts pay for themselves: “Some in Washington say we had to choose between cutting taxes and cutting the deficit….Today’s numbers show that that was a false choice. The economic growth fueled by tax relief has helped send our tax … -
Combined Effect of Bills Moving in the Senate Would Be To Finance Near-Repeal of the Estate Tax With Cuts in Medicare, Veterans Benefits, School Lunches, and Other Programs
June 26, 2006
At the urging of Senate Republican leader Bill Frist, the House of Representatives last week approved a measure designed by House Ways and Means Committee chairman Bill Thomas to repeal most but not all of the estate tax. The measure contains no “offsets”; its large cost would be financed through higher deficits.…
