Tax — Federal Archive
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Together, State Minimum Wages and State Earned Income Tax Credits Make Work Pay
Revised November 20, 2006
In recent years, federal policies aimed at ensuring adequate income for working families have not kept up with inflation, leaving many working families struggling to make ends meet. The particular culprit is the federal minimum wage, which has not been adjusted for inflation since 1997. Other policies such as the federal Earned … -
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 … -
A Short Guide to Dynamic Scoring
Revised August 24, 2006
In recent years, official scorekeepers and academic researchers have devoted increased attention to the macroeconomic effects of tax cuts. The Treasury also conducted a “dynamic analysis” of the President’s tax cuts that was included in this year’s Mid-Session Review of the budget as well as in a separate Treasury report.[1] … -
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. … -
Combined Effect of Senate Proposals Would Be To Finance Near-Repeal of the Estate Tax with Cuts in Medicare, Veterans Benefits, School Lunches, and Other Programs
August 9, 2006
At the urging of Senate Republican leader Bill Frist, the Senate last week considered a House-passed proposal to repeal most but not all of the estate tax. The measure contains no “offsets”; its large cost would be financed through higher deficits. In June, the Senate Budget Committee approved a far-reaching bill to make major changes in … -
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.… -
Estate Tax "Compromise" Proposals May Endanger State Estate and Inheritance Taxes
Revised June 23, 2006
On June 22, the House of Representatives approved an estate tax proposal introduced by House Ways and Means Chairman Bill Thomas. While supporters of the proposal describe it as a “compromise,” it would in fact eliminate the vast bulk of estate tax revenue and has been more aptly characterized as “near repeal.… -
High Cost of Thomas Proposal Reflects the Low Effective Tax Rates Estates Would Face Proposal’s Benefits Would Go Primarily to Largest Estates
Revised June 23, 2006
On June 22, the House passed legislation to sharply reduce the estate tax, and the Senate may vote on the legislation next week. Introduced by House Ways and Means Committee Chairman Bill Thomas, the measure would exempt the first $10 million of an estate for a couple ($5 million for an individual) and would index this exemption for inflation after 2010.… -
Thomas Estate Tax Proposal Still "Near Repeal"
Revised June 23, 2006
On June 22, the House of Representatives passed estate-tax legislation (H.R. 5638), introduced by House Ways and Means Chairman Bill Thomas, that is very similar to — and even slightly more costly than — the most recent estate-tax proposal floated by Senator Jon Kyl. Both proposals would cost nearly as much as permanent repeal of the … -
New Estate Tax Anecdotes Dredge Up Old Myth That the Estate Tax Claims Half of an Estate
June 14, 2006
Opponents of the estate tax often claim that it forces estates to pay half of their assets in taxes. For example, during the Senate debate on the estate tax earlier this month, Senator Jon Kyl told the story of a businessman whose family allegedly had to pay “half of the value of [his] company to the government.” Senator Kyl went so far … -
New Joint Tax Committee Estimates Show Modified Kyl Proposal Still Very Costly
Revised June 13, 2006
On June 8, the Senate rejected, by a vote of 57-41, a motion to consider permanent repeal of the estate tax (under Senate rules, the measure required 60 votes to pass). During the lead-up to the vote, Senator Jon Kyl floated a modification of his longstanding “compromise” proposal to repeal most but not quite all of the estate tax. … -
Cost of Estate Tax Compliance Does Not Approach the Total Level of Estate Tax Revenue
Revised June 9, 2006
It has been claimed that the costs of complying with the estate tax are nearly equal to the total amount of revenue the tax raises. While it is true that wealthy people devote considerable time and money to sheltering their estates from taxation, there is no credible evidence that compliance costs — including the … -
New Joint Committee on Taxation Estimates of Estate Tax Repeal Show Slightly Higher Costs
June 9, 2006
The Joint Committee on Taxation this week released new estimates of the cost of making permanent the repeal of the estate tax after 2010. These estimates of the cost of H.R. 8, the measure that passed the House last year (and that the Senate voted on June 8 not to consider), show that permanent repeal would cost $386.5 billion between 2007 and 2016.… -
Estate Tax Repeal Would Decrease National Saving
June 8, 2006
Repeal of the estate tax would add about $1 trillion to federal deficits over the first decade in which its costs would be fully felt (2012-2021). These higher deficits would reduce national savings, with the consequence that, in the long run, estate tax repeal would have at best negligible, and possibly negative, effects on the economy. Surprisingly, … -
Estate Tax Repeal — or Slashing The Estate Tax Rate — Would Substantially Reduce Charitable Giving
June 7, 2006
Repealing the estate tax would substantially reduce U.S. charitable giving, according to research by the Congressional Budget Office and various economists. As CBO’s study explains, the estate tax creates powerful incentives for affluent individuals to donate to charity. Since donations made both during life and at death reduce the size of an estate and thus the amount subject … -
A "Mere" $300 Billion: Should a $300 Billion Deficit Be Considered a Victory?
Revised June 5, 2006
On May 4, the Congressional Budget Office revised its estimate of the deficit for the current fiscal year (2006) to “significantly less than $350 billion, perhaps as low as $300 billion, assuming enactment of the pending supplemental appropriations and tax reconciliation legislation.”[1] On May 9, Goldman Sachs … -
Estate Tax "Compromise" With 15 Percent Rate Is Little Different Than Permanent Repeal
Revised June 2, 2006
The Senate is expected to vote on estate tax repeal in June of this year. Permanent repeal of the estate tax would cost nearly $1 trillion between 2012 and 2021, the first ten year period in which its costs would be fully felt. (This cost includes $776 billion in revenue loss and $213 billion in higher interest payments on the federal debt.[1]) In … -
The State of the Estate Tax as of 2006
Revised June 2, 2006
With the Senate preparing to vote on permanent repeal of the estate tax in June, it is important to take stock of the changes that have already been made to the tax. As a result of legislation enacted in 2001, the portion of an estate that is exempt from taxation has more than doubled since 2000 and stands at $2 million ($4 million per couple) in 2006.… -
The House-Passed Budget Plan
Revised May 22, 2006
In the early morning of May 18, the House passed a budget plan (or “budget resolution”) for fiscal year 2007. In a separate vote later that day, the Housed “deemed” that the Congress has given final approval to the plan. As a result of this “deemer,” the House budget plan is now … -
Contrary To President's Claim, Large Majority of Americans Ultimately Will Lose From Tax Reconciliation Bill
May 17, 2006
In his recent statement responding to the tax reconciliation bill conference agreement, President Bush asserted that failure to extend the tax cuts contained in the bill would be “disastrous” for “all working Americans.”[2] The President’s claim is implausible in light of the distribution of the … -
Press Release: Most Americans Likely To End up Net Losers When New Tax-Cut Bill Is Paid For
May 17, 2006
New data from the Urban Institute-Brookings Institution Tax Policy Center indicate that whether the new tax-cut bill the President will sign today is ultimately paid for through program cuts, tax increases, or some combination of the two, the small or non-existent tax benefit that most Americans will get from the bill will likely be outweighed … -
Roth IRA Provision Effectively Eliminates Income Limits on Roth IRAs
Revised May 15, 2006
The tax reconciliation bill conference agreement gives the appearance of retaining the current income limits on who can make contributions to Roth IRAs. In reality, however, the legislation changes the Roth IRA rules in a way that effectively eliminates the income limits on these contributions. As a result, all income limits on the use of Roth IRAs would in effect be dismantled … -
Press Release: New Estimates Show Expected Tax Reconciliation Deal Would Provide Average Tax Cuts of $20 for Middle-Income Households, $42,000 for Millionaire Households
Revised May 12, 2006
New estimates from the Urban Institute-Brookings Institution Tax Policy Center (TPC) show that the $70 billion tax-cut reconciliation package reportedly agreed to by House and Senate negotiators will offer virtually no benefits to low- and moderate-income households, but shower high-income … -
Reconciliation Tax Cuts Would Average $43,000 for Households with Income over $1 Million
Revised May 12, 2006
The final agreement on the $70 billion tax-cut reconciliation package offers virtually no benefits to low- and moderate-income households, but showers high-income households with very large tax cuts. The Urban Institute-Brookings Institution Tax Policy Center has examined the major provisions that are in the package, including a two-year extension of capital gains and … -
Statement of Robert Greenstein on the Tax-Cut Reconciliation Agreement
Revised May 11, 2006
This indefensible agreement provides a windfall for the most well-off but little or nothing for most other Americans, relies on budget gimmicks to help mask its long-term costs, and will further increase our already large and unsustainable deficits. Analysis by the Urban Institute – Brookings … -
Tax Reconciliation Agreement Distorted by Obsession with Capital Gains and Dividend Tax Cuts
Revised May 11, 2006
House and Senate negotiators announced an agreement yesterday on a tax-cut reconciliation bill that would reduce revenues by $70 billion between 2006 and 2010, according to Joint Committee on Taxation estimates. Although nearly half of this cost reflects a one-year extension of relief from the Alternative Minimum Tax, it is the two-year extension of the … -
Fact Sheet: Tax-Cut Reconciliation Agreement Severely Flawed
May 9, 2006
Whether one looks at the conference agreement bill from the standpoint of fiscal responsibility, of budgetary integrity, or of fairness, the agreement is seriously flawed. More, and more, tax cuts. The bill officially costs $70 billion, but the conferees stayed within the $70 billion … -
Tax Foundation Figures Do Not Represent Middle-Income Tax Burdens
Revised April 13, 2006
As in past years, the Tax Foundation has released a report projecting “Tax Freedom Day,” which it describes as the day when “Americans will finally have earned enough money to pay off their total tax bill for the year.” Over the years, pundits and policymakers often have misinterpreted the Tax Foundation’s report as reflecting the tax burdens that the broad … -
Closing the Tax Gap
April 10, 2006
The Internal Revenue Service recently released updated estimates showing that the tax gap – which it describes as “the difference between what taxpayers should have paid and what they actually paid on a timely basis” — was $345 billion in Tax Year 2001. (This does not include unpaid taxes on illegal activities.)[1] This represents a non-compliance rate of 16.3 … -
Federal Tax Burdens at Lowest Levels in Decades
April 10, 2006
The percentage of income that most categories of taxpayers pay in federal taxes is at the lowest level in decades. Despite this fact — and despite the large current federal budget deficit and the even larger fiscal problems projected for coming decades — the Administration and Congress are pushing for additional tax cuts that would aggravate … -
Recent Tax and Income Trends among High-Income Taxpayers
April 10, 2006
Administration officials have consistently sought to portray the distribution of benefits from the 2001 and 2003 tax cuts as balanced or even progressive. Recently, for example, the Treasury Department released a “Tax Relief Kit,” which includes a fact sheet entitled “Who Pays Most Individual Income Taxes?” The fact sheet … -
Tax Reform and Poverty
April 10, 2006
The tax system has a pervasive impact on poverty, both directly through its role in the distribution of society’s resources and indirectly through its effects on the incentives for economic decisions like working and saving. The two most important facets of the tax system for low-income families are payroll taxes and the Earned Income Tax Credit … -
Background on Potential Budget Gimmick in Tax Reconciliation Conference
March 28, 2006
Issued Jointly With Lawmakers currently trying to work out differences between the versions of the tax cut reconciliation legislation that the House and Senate passed last year reportedly are considering using a gimmick — which entails claiming that one tax cut “pays for” another tax cut — to evade an important Senate rule. That … -
Press Release: Joint Statement Opposing Potential Budget Gimmick
March 28, 2006
Issued Jointly With Congress is contemplating a gimmick that would circumvent existing budget enforcement rules in the Senate and increase long-term deficits. House and Senate conferees on the reconciliation tax bill are considering a proposal to offset part of the short-term revenue loss (in 2011 through 2015) from one tax cut by enacting another … -
The Capital Gains and Dividend Tax Cuts and The Economy
March 27, 2006
The Treasury Department recently released a report entitled “The Economic Effects of Cutting Dividend and Capital Gains Taxes in 2003.” While the text of the new document acknowledges that gains in the economy since 2003 “are the result of a combination of many factors,” the pictures that accompany the report communicate a less nuanced message. [1] The graphs … -
The Senate Budget Committee's Budget Plan: A Brief Analysis
March 16, 2006
Summary The Senate is scheduled this week to consider a budget plan that the Senate Budget Committee adopted last week on a party-line vote. The plan — known as a budget resolution — is similar in a number of respects (but not in others) to the budget proposed earlier this year by President Bush. It would cut domestic … -
A Hand Up: How State Earned Income Tax Credits Help Working Families Escape Poverty in 2006
March 8, 2006
Executive Summary An Earned Income Tax Credit is a tax reduction and a wage supplement for low- and moderate-income working families. The federal government administers an EITC through the income tax. So do many states. States that enact EITCs can reduce child poverty, increase effective wages, and cut taxes for families struggling to make ends … -
Administration Proposals To Hide Tax-Cut Costs
February 14, 2006
The President’s 2007 budget includes two proposals that risk corrupting federal budget rules in order to facilitate passage of Administration tax cuts. One proposal calls on Congress to adopt a new scoring convention that would make the cost of extending the 2001 and 2003 tax cuts disappear; under this proposal, legislation to … -
Effects of the Tax Reform Panel’s Proposals on Low- and Moderate-Income Households
February 3, 2006
Executive Summary On November 1, 2005, the President’s Advisory Panel on Tax Reform presented its recommendations to Treasury Secretary John Snow. The panel’s report offers two alternative comprehensive reform plans, a “simplified income tax plan” and a “growth and investment tax plan.” Both plans, the panel argues, would improve on the current …
