Tax — Federal Archive
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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. … -
How Much Would a State Earned Income Tax Credit Cost in 2010?
November 12, 2009
The federal Earned Income Tax Credit (EITC) is the nation’s most effective anti-poverty program for working families, lifting 6.5 million people — including 3.3 million children — above the poverty line each year.[1] The 24 state-level EITCs modeled after the federal program complement it in combating … -
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 … -
State Earned Income Tax Credits: 2009 Legislative Update
November 10, 2009
An Earned Income Tax Credit (EITC) modeled on the federal program of the same name is now offered in 23 states and the District of Columbia as a way to reduce taxes and supplement wages for low- and moderate-income working families. A large body of evidence has shown that the state and federal EITCs serve a number of important … -
Excise Tax on Very High-Cost Health Plans Is a Sound Element of Health Reform
Revised November 10, 2009
An excise tax on very high-cost health plans, which the Senate Finance Committee included in its health reform bill, represents a sound way to help pay for health reform. The excise tax finances nearly a quarter of the costs of the Finance Committee bill over the first ten years ($201 billion out of $829 billion) and makes a major contribution to the … -
Berkley Estate Tax Bill Would Add Billions to Deficit While Benefiting Only Wealthiest 1 in 500 Estates
Revised November 9, 2009
A new estate tax bill introduced by Representative Shelley Berkley (D-NV) and others would cost $91 billion more over the first decade (2012-2021) than extending the tax under its current rules as the President has proposed, yet would benefit only the nation’s wealthiest 0.2 percent of estates since they are the only ones … -
Proposed Expansions of Homebuyer Tax Credit Would Be Highly Inefficient and Squander Federal Resources
October 27, 2009
Executive Summary Members of Congress are considering extending — and possibly substantially expanding — the $8,000 homebuyer tax credit enacted as part of the American Recovery and Reinvestment Act (ARRA) of 2009. The credit, which is available to first-time homebuyers with incomes up to $150,000 (up to $75,000 for … -
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 … -
Senate Finance Committee Health Reform Bill Is Fiscally Responsible
Revised October 13, 2009
A fundamental principle of the bill that the Senate Finance Committee approved today is that it is budget neutral — that is, its costs are fully offset. It pays for the costs of expanding health coverage to the uninsured by redirecting spending and tax subsidies from less productive uses elsewhere in the health sector. Several of the offsets are … -
Podcast: The Deficit, Debt, and Interest
September 22, 2009
In this podcast, the federal government deficit, debt, and interest is explained by Director of Federal Fiscal Policy, Jim Horney.
Duration: 5:45
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Tax Offsets in Baucus Health Plan Are Sound But Can Be Improved
September 18, 2009
The health reform proposal by Senate Finance Committee Chairman Max Baucus would place a 35-percent excise tax on the value of health plans in excess of $8,000 for singles and $21,000 for families, starting in 2013; these thresholds would be indexed for inflation in later years. The excise tax is a sound way to help pay for health reform, but it … -
Banning Taxation of Online Hotel Reservations Is Unwarranted and Could Cost States and Localities Billions of Dollars
Revised September 18, 2009
For the past two years, online travel companies like Expedia and Priceline have been seeking enactment of federal legislation that would ban state and local taxation of hotel room rentals when booked by such a company or by a conventional travel agent. Most recently, the legislation was circulated as a potential amendment to … -
Podcast: High-Income Surcharge Can Help Pay for Health Reform
August 25, 2009
Chuck Marr, director of federal tax policy, discusses the need for health reform and one option to help pay for it: a surcharge on high-income households under consideration by the House of Representatives.
Duration: 4:43
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An Excise Tax on Insurers Offering High-Cost Plans Can Help Pay for Health Reform
August 7, 2009
The federal government provides substantial tax subsidies for health insurance, especially for high-cost insurance plans for people with high incomes. The Senate Finance Committee is considering placing an excise tax on insurance companies that offer very high-cost health insurance plans. This proposal would help achieve two important objectives: … -
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 … -
Podcast: The Estate Tax
July 14, 2009
Director of Federal Tax Policy, Chuck Marr, discusses the basics of the estate tax and the debate about it in Congress.
Duration: 5:04
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Reports Calling for Estate Tax Repeal Seriously Flawed
July 7, 2009
Despite questionable reports to the contrary, repealing the estate tax would weaken the economy by adding nearly $800 billion to budget deficits over 10 years, thus reducing national saving and leaving fewer funds for investment that leads to higher productivity in the long run. Two recent reports from the American Family Business … -
Policy Basics: The Estate Tax
Revised June 25, 2009
A longstanding feature of the tax system, the estate tax is a tax on property (such as cash, real estate, stock, or other assets) that is transferred from deceased persons to their heirs. Only a Few, Large Estates Owe Any Estate Tax Fewer than 3 in 1,000 estates are expected to be subject to the … -
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. … -
Taxing High-Sugar Soft Drinks Could Help Pay For Health Care Reform
May 27, 2009
By establishing a tax on high-sugar soft drinks, Congress could help finance health care reform that extends health insurance to all Americans and slows the growth of health care costs, while also improving Americans’ health. This paper, which is part of a series of papers on proposals to help pay for health … -
Reversing the Erosion in Alcohol Taxes Could Help Pay for Health Care Reform
May 27, 2009
To help pay for health care legislation that extends health insurance to all Americans and slows the growth of health care costs, Congress should consider reversing the substantial real decline in recent decades in federal excise taxes on alcohol. This paper, which is part of a series of papers on proposals to help pay for health reform, outlines three options … -
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 … -
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 … -
The Senate and the Estate Tax: Cutting Through the Fog
April 16, 2009
Earlier this month, the Senate voted on an amendment to the budget resolution, offered by Senators Jon Kyl and Blanche Lincoln, to shrink the estate tax in various ways. A number of major newspapers, including the New York Times and Washington Post, editorialized strongly against this proposal. Senators Kyl and Lincoln wrote … -
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 … -
Huffington Post Op-Ed: Senate to Uber-Rich: “Help Is on the Way”
April 13, 2009
"...Is this the time to spend about $90 billion over the next decade to give the nation's wealthiest households a new, multi-million-dollar tax cut? The U.S. Senate apparently thinks so." Read more -
Policy Basics: Where Do Our Federal Tax Dollars Go?
Updated April 13, 2009
The federal government collects taxes in order to finance various public services. As policymakers weigh key decisions about revenues and expenditures, it is instructive to examine the recent usage of federal tax dollars. In fiscal year 2008, the federal … -
Lincoln-Kyl Estate Tax Amendment is Both Unnecessary and Unaffordable
Revised April 10, 2009
On April 2 the Senate narrowly adopted (by a 51-48 vote) an amendment to the budget resolution by Senators Blanche Lincoln and Jon Kyl that would substantially weaken the estate tax. This proposal is both fiscally irresponsible — it would pave the way for a significant increase in … -
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 … -
Two Key Tests for House and Senate Action on Congressional Budget Resolution
March 31, 2009
As Congress prepares a budget resolution for fiscal year 2010, it should apply two key tests to any proposed change in the plans approved by the House and Senate Budget Committees: Would the proposal support economic recovery in the near term? Would … -
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 … -
Policy Basics: Deficits, Debt, and Interest
March 19, 2009
Three important terms regarding the federal budget — deficits, debt, and interest — are often misunderstood. 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 takes in (also known … -
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 … -
Congress Should Not Weaken Estate Tax Beyond 2009 Parameters
Revised March 11, 2009
The Administration’s recently-released budget proposes to make permanent key features of the estate tax that are in place in 2009. This will launch a major congressional debate. Under current law, the tax has been phasing down for several years and is scheduled to end entirely in 2010, only to return in 2011 under the parameters that were in place in … -
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 … -
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 … -
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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Economic Recovery Package Would Give 3.8 Million Low- and Moderate-Income Students — Thousands in Every State —Access to Higher-Education Tax Credit
Revised February 26, 2009
The “Hope Credit,” which provides a tax subsidy for college tuition costs, was established in 1997. Its goal, in part, was to enable students who could not otherwise afford to attend college to do so. Yet until now, 3.8 million prospective college students — more than a fifth of all high-school-age children nationwide … -
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 … -
Impact of Estate Tax on Small Businesses and Farms Is Minimal
February 23, 2009
Congress is expected to debate permanent changes in the estate tax in coming months. A key issue in that policy debate is likely to be the effect of the estate tax on estates containing small businesses and family-owned farms.[1] Some proponents of repealing or weakening the estate tax beyond its current form claim that doing is so is necessary because of the impact of the tax on small business 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 … -
Slideshow: The Estate Tax
Updated February 23, 2009
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The Estate Tax: Myths and Realities
Revised February 23, 2009
The estate tax has been an important source of federal revenue for nearly a century. It also encourages billions of dollars in charitable donations each year (http://www.cbpp.org/6-7-06tax.htm), since donations substantially reduce the tax on large estates. Despite these benefits, a number of misconceptions continue to surround … -
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 … -
Costly Isakson Homebuyer Tax Credit Amendment Would Be Ineffective Stimulus
February 9, 2009
An amendment by Senator Isakson that the Senate added to its economic recovery legislation, providing a new $15,000 tax credit for home purchases in the 12 months after enactment,[1] has low bang for the buck as stimulus and is thus a dubious addition to the package. Unlike the $7,500 first-time homebuyer credit that Congress adopted as part of the Housing and Economic Recovery Act in July 2008 — which the new tax credit … -
Proposal to Lower Bottom Tax Rates Less Effective as Stimulus than "Making Work Pay" Credit
Updated February 3, 2009
A proposal to cut income tax rates, which Senate Minority Leader Mitch McConnell wants to include in economic recovery legislation, would provide its largest benefit to the top fifth of households and prove less effective as economic stimulus than the provision it would replace — President Obama’s “Making Work Pay” tax credit. The proposal, which was first unveiled January 23 by House Minority Leader John … -
Proposed Tax Break For Multinationals Would Be Poor Stimulus
Updated February 3, 2009
Relying on a flawed study funded by an entity that promotes corporate and capital gains tax cuts,[1] some business groups have proposed resurrecting, as a stimulus measure, the 2004 “dividend repatriation tax holiday” — which allowed firms to bring their foreign-generated profits back to the United States at a greatly reduced tax rate. More recently, … -
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 … -
House and Senate Recovery Packages Would Improve Higher-Education Tax Credits
Revised February 2, 2009
The economic recovery package passed by the House last week[1] contains a measure that both would extend the Hope tax credit to nearly 4 million low-income students and make the credit more valuable to millions of middle-income students. The Senate Finance Committee has included a similar proposal in its economic recovery package. The House measure would increase the credit’s maximum … -
Proponents of Estate Tax Repeal Resurrecting Old Misconceptions
February 2, 2009
With Congress expected to debate permanent changes in the estate tax in coming months, some proponents of repealing the tax or weakening it beyond its current form are resurrecting old misconceptions about the tax. For example, a recent Wall Street Journal editorial claimed that repealing the estate tax would increase national saving and that U.S. estate taxes are high … -
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 … -
Temporarily Increasing Unemployment Benefits is Better Targeted and More Stimulative Than Suspending Taxation of Unemployment Benefits
January 27, 2009
Both the House and Senate recovery packages include a $25 per week temporary increase in unemployment insurance benefits. Economists, including Mark Zandi of Moody’s Economy.com, routinely rate increased unemployment benefits as among the most stimulative provisions under … -
Payroll Tax Holiday a Poor Stimulus Idea
January 26, 2009
This week Senate Minority Leader Mitch McConnell suggested suspending the Social Security payroll tax for a period of time, as a stimulus measure. A payroll tax holiday, however, would both be costly — a two-month suspension could cost about $120 billion, for example[1] — and likely relatively ineffective as a stimulus measure. Public resources would … -
Tax Credit Provisions in House and Senate Recovery Packages Would Lessen Growth in Poverty
January 26, 2009
While reviving the economy is the overriding goal of the economic recovery package, particular elements of the package are likely to have other important benefits as well. One is to counter what otherwise will be a major spike in child poverty. The House recovery plan contains a number of poverty-reducing provisions, three of which — a new “Making Work … -
Corporate Tax Rate Cut Likely To Be Ineffective As Stimulus
January 23, 2009
Numerous government and independent studies agree that corporate tax rate cuts provide relatively little “bang-for-the-buck” as stimulus. The Congressional Budget Office (CBO), for example, has concluded that a corporate rate cut “is not a particularly cost-effective method of stimulating business spending.”[1] The Congressional Research … -
Capital Gains Tax Cut Would Be Poor Stimulus
January 15, 2009
In recent weeks, several policymakers have proposed temporary or permanent cuts in the capital gains rate as an “economic stimulus” measure. This would be ineffective at best: the Congressional Research Service (CRS) has stated that “a capital gains tax cut appears the least likely of any permanent tax cut to … -
Policy Basics: The Earned Income Tax Credit
December 17, 2008
The Earned Income Tax Credit (EITC) is a federal tax benefit for low- and moderate-income workers that helps offset the payroll and income taxes they pay. Very low-wage workers can also receive an income supplement through the EITC: if the size of the credit exceeds the amount of … -
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 … -
Ways and Means Committee Republicans’ Use of Joint Tax Committee Data is Deeply Deceptive
Revised November 12, 2008
In a November 8 press release, Ways and Means Committee Ranking Member Jim McCrery claimed that new estimates from the nonpartisan, highly respected Joint Committee on Taxation (JCT) show that Ways and Means Committee Chairman Charles Rangel’s recently-introduced tax reform bill would raise taxes on 113 million households.[1] The claim is false; the … -
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. … -
State Earned Income Tax Credits: 2008 Legislative Update
Updated October 8, 2008
Twenty-four states (counting the District of Columbia) have enacted an Earned Income Tax Credit (EITC), a tax reduction and a wage supplement for low- and moderate-income working families. State EITCs are based on the federal EITC, which a large body of evidence has shown to serve a number of important public policy goals. States … -
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 … -
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 … -
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 … -
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 … -
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 … -
Testimony of James Horney on Addressing the Nation's Financial Challenges
June 26, 2008
Chairman Carper, Senator Coburn, Members of the Committee, thank you for the opportunity to appear here today to talk about the long-term fiscal problems facing the United States. My name is James Horney. I am the Director of Federal Fiscal Policy at the Center on Budget and Policy Priorities, which is a non-partisan, non-profit … -
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 … -
Policy Points: "Tax Extenders" Bill the Latest Test of Congress's Commitment to Fiscal Discipline
June 10, 2008
“Tax extenders” legislation now before the Senate has become the latest battleground in the intensifying debate over whether Congress should abide by its “pay-as-you-go” (PAYGO) rules and pay for new tax and budget measures so they don’t expand the deficit. Opposition to abiding by PAYGO is also impeding congressional action to extend Alternative Minimum Tax relief … -
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 … -
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 … -
Statement by Robert Greenstein, on Misleading Claims That Congressional Budget Plan Calls For "Largest Tax Increase In History"
May 20, 2008
Some claim that the budget plan of the conferees — which the House and Senate are scheduled to consider this week — would constitute “the largest tax increase in history.” This claim is inaccurate, just as the same claim was inaccurate with regard to the budget … -
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 … -
How Much Would a State Earned Income Tax Credit Cost in 2009?
May 5, 2008
Twenty-three states have enacted tax credits for low- and moderate-income working families based on the federal Earned Income Tax Credit. A number of additional states are considering enacting EITCs in the 2008 legislative session. The following provides guidelines that policymakers and others can use to estimate … -
Federal Spending, 2001-2008: Defense Is a Rapidly Growing Share of the Budget, While Domestic Appropriations Have Shrunk
Revised March 6, 2008
Both last year and this year, President Bush called for large funding increases for defense and related programs while demanding considerable restraint in domestic appropriations. And this year, like last year, he has threatened to veto appropriations bills if Congress does not adhere to his tight domestic levels. Some may think … -
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 … -
Policy Points: Experts Agree That Capital Gains Tax Cuts Lose Revenue
Revised May 7, 2007
During Wednesday’s Democratic presidential debate, Charles Gibson of ABC News made the following statements about capital gains taxes: “Bill Clinton in 1997 signed legislation that dropped the capital gains tax to 20 percent and George Bush has taken it down to 15 percent and in … -
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 … -
Fact-Checking the Budget Resolution Debate
Revised March 13, 2008
In the ongoing debates over the House and Senate budget resolutions, some members of Congress have made questionable or inaccurate statements regarding various issues. This brief factsheet, which will be updated as needed throughout the debates, corrects the record regarding some of the most egregious examples. 1. “Eighteen million seniors will see their … -
Kyl Estate Tax Amendment Would Cost Nearly As Much As Estate Tax Repeal
March 12, 2008
Permanent repeal of the estate tax would reduce revenues by almost $1 trillion between 2012 and 2021, the first ten-year period in which its costs would be fully felt. With the economy slowing and deficits returning — and with far larger deficits projected for future years — there is increasing recognition that … -
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 …
