Taxes and the Economy
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Off the Charts Blog: Questions About Apple’s Tax Strategy Highlight Risks of a Territorial Tax System
May 22, 2013
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Tax Credits for Lower-Income Working Families Help 21 Million Mothers
May 9, 2013
Two working-family tax credits — the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) — have proven to be powerful tools for reducing children's poverty and advancing their long-term well-being.[1] About 21 million low- and moderate-income working mothers received either the EITC or the low-income portion of the CTC in … -
Reducing Overpayments in the Earned Income Tax Credit
April 30, 2013
A recent report from the Treasury Department’s Inspector General raised the issue of overpayments in the Earned Income Tax Credit (EITC).[1] The EITC, a tax credit for low- and moderate-income working families that has been shown to increase work, lower welfare receipt, and reduce poverty, has a significant error rate that needs … -
The Earned Income Tax Credit and Refundable Child Tax Credit in Rural America
April 19, 2013
In 2010, 22.9 percent of rural tax filers — compared with 20 percent of filers nationwide — claimed the Earned Income Tax Credit (EITC), according to research by the Brookings Institution and the Carsey Institute.[1] This difference reflects rural areas’ generally lower wage levels. The EITC brought $10.5 billion in benefits to … -
Chart Book: Top Ten Tax Charts
Updated April 18, 2013
In recognition of Tax Day, we’ve collected our top ten charts related to federal taxes. Together, they provide useful context for ongoing debates about how to reduce deficits and reform the tax code. Our first chart reminds us what taxes pay for. National defense, Social Security, and major health programs like Medicare and Medicaid account for … -
Policy Basics: Deficits, Debt, and Interest
Updated April 18, 2013
Three important budget concepts — deficits (or surpluses), debt, and interest — are often misunderstood. Deficits (or Surpluses) For any given year, the federal budget deficit is the amount of money the federal government spends (also known as outlays) minus the amount of money it … -
Myths and Realities about the Estate Tax
Revised April 16, 2013
The estate tax is a tax on property (cash, real estate, stock, or other assets) transferred from deceased persons to their heirs. Only the wealthiest estates in the country pay the tax because it is levied only on the portion of an estate’s value that exceeds a specified exemption level, currently $5.25 million per person … -
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 … -
Federal Income Taxes on Middle-Income Families Remain Near Historic Lows
Revised April 11, 2013
Federal taxes on middle-income Americans are near historic lows,[1] according to the latest available data. That’s true both for federal income taxes and total federal taxes.[2] Income taxes: A family of four in the exact middle of the income spectrum will pay only 5.3 percent of its 2013 income in federal income taxes next year, according to a new analysis by … -
Earned Income Tax Credit Promotes Work, Encourages Children’s Success at School, Research Finds
Revised April 9, 2013
The Earned Income Tax Credit (EITC), which went to 27.5 million low- and moderate-income working families in 2010, provides work, income, educational, and health benefits to its recipients and their children, a substantial body of research shows. In addition, recent ground-breaking research suggests, the EITC’s benefits extend well … -
Mortgage Interest Deduction Is Ripe for Reform
April 4, 2013
Costing about $70 billion a year, the mortgage interest deduction is one of the largest federal tax expenditures, but it appears to do little to achieve the goal of expanding homeownership. The main reason is that the bulk of its benefits go to higher-income households who generally could afford a home without assistance: in 2012, … -
Tax Foundation Figures Do Not Represent Typical Households’ Tax Burdens
April 2, 2013
The Tax Foundation released its annual “Tax Freedom Day” report today that, once again, can leave a strikingly misleading impression of tax burdens — showing an average federal tax rate across the United States that’s likely higher than the tax rate that 80 percent of U.S. households actually pay. To project the day … -
Ryan Budget Understates Defense Spending by $100 Billion
March 19, 2013
The Ryan budget understates defense spending by $100 billion over the next ten years. It claims $100 billion in defense savings that, in reality, would not materialize because they are flatly inconsistent with Congressional Budget Office (CBO) estimates of the amount of defense spending that would result from the amount of defense … -
An Apples-to-Apples Comparison of the Deficit-Reduction Figures in the House and Senate Budget Plans
March 19, 2013
The House and Senate are scheduled to consider the budget resolutions that their respective budget committees approved last week. These two budgets — one drafted by House Budget Committee Chair Paul Ryan, the other by Senate Budget Committee Chair Patty Murray — offer sharply contrasting visions.[1] Yet they are not … -
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 … -
Paul Van de Water Testimony: Health Reform’s Tax Provisions Are Sound Health and Tax Policy
March 5, 2013
Mr. Chairman, Ranking Member Lewis, and members of the subcommittee, I appreciate the invitation to appear before you today. The Affordable Care Act (ACA) will extend health insurance coverage to 27 million people and help assure that Americans have access to affordable coverage. And it will do so in a fiscally responsible way. In … -
Economic Downturn and Legacy of Bush Policies Continue to Drive Large Deficits
Updated February 28, 2013
Federal deficits and debt have been sharply higher under President Obama, but the evidence continues to show that the Great Recession, President Bush’s tax cuts, and the wars in Afghanistan and Iraq explain most of the deficits that have occurred on Obama’s watch — based on the latest Congressional Budget Office projections … -
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 … -
Testimony of Robert Greenstein, President, Center on Budget and Policy Priorities, Before the Senate Committee on Finance
February 26, 2013
Mr. Chairman and distinguished members of the Finance Committee, I appreciate the invitation to testify here today. As we all know, the nation faces fiscal and economic challenges, and we will have to make some tough decisions to put the budget on a more sustainable fiscal course and to do so without hindering a still-too-weak economic … -
Commentary: A Look at the New Simpson-Bowles Plan
February 22, 2013
The new deficit-reduction plan that Alan Simpson and Erskine Bowles issued this week calls for $2.4 trillion of additional deficit reduction over the next ten years (through 2023), with roughly $2.1 trillion in policy changes and about $300 billion in resulting interest savings.[1] Of the policy savings, about $700 billion would come … -
$1.5 Trillion in Deficit Savings Would Stabilize the Debt Over the Coming Decade
February 11, 2013
Policymakers could stabilize the public debt over the coming decade with $1.5 trillion in additional deficit savings, according to the Center’s updated calculations, which are based on the new budget projections that the Congressional Budget Office (CBO) released this week. Policymakers could achieve these savings with $1.3 … -
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. … -
To Stabilize the Debt, Policymakers Should Seek Another $1.4 Trillion in Deficit Savings
January 9, 2013
With the “fiscal cliff” deal in place, President Obama and Congress are now expected to seek more deficit reduction to replace the automatic spending cuts (“sequestration”) that are scheduled to take effect on March 1. Policymakers can stabilize the public debt over the coming decade, ensuring that it … -
Budget Deal Makes Permanent 82 Percent of President Bush’s Tax Cuts
January 3, 2013
The American Taxpayer Relief Act of 2012 (ATRA)[1] , which President Obama signed into law last night, makes permanent 82 percent of President Bush’s tax cuts. The Joint Committee on Taxation (JCT) and Congressional Budget Office estimate that making permanent all of the Bush tax cuts would have cost $3.4 trillion over 2013-2022.[2] …
