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Required Reading for Tomorrow’s Senate Tax Cut Hearing

July 13, 2010

Tomorrow morning the Senate Finance Committee begins debate on what to do with the Bush tax cuts, which are set to expire at the end of the year. Here’s some homework to prepare for this important hearing:

Taming the Deficit? Hardly!

July 1, 2010

My colleagues and I have written repeatedly (for instance, here, here, and here) about the need for Congress to enact another round of stimulus legislation that would extend unemployment benefits and provide additional fiscal relief to states, both of which would help strengthen the fragile recovery.

Senate Moving Backwards on Jobs Bill

June 18, 2010

With the country facing high unemployment and a weak economy in the short term and severe budget problems in the long term, you’d think that senators negotiating a jobs bill would be trying to maximize both its short-term economic boost and its long-term budget savings. You’d be wrong.

Why Closing the S Corporation Loophole Is a Good Move

June 16, 2010

The House-passed tax extenders legislation, which the Senate is now considering, would partially close a loophole that allows shareholder-employees of S corporations to avoid paying payroll tax. These people receive both wages from the firm and a share of the firm’s profits, but they pay payroll tax only on their wages, which gives them a huge incentive to underreport the share of their income that consists of wages in order to reduce their payroll tax liability.

Opponents of Closing “Carried Interest” Loophole Actually Make Opposite Case

June 11, 2010

Policymakers would be well-advised to read a new Tax Notes piece by Douglas Holtz-Eakin, Cameron Smith, and Winston Stoody, which argues against closing a tax loophole that enables investment fund managers to pay taxes on their income – their “carried interest” – at the preferential capital gains rate rather than ordinary income tax rates.

Carried Interest Doesn’t Deserve a Special Tax Break

May 26, 2010

The private equity industry has descended on Capitol Hill to preserve the lower tax rate for something known as “carried interest,” as compared to the tax rate Americans normally pay on the income they earn. While many interest groups try to convince lawmakers that they deserve special treatment, the proponents of this lower tax rate make a particularly unconvincing case.

On Estate Tax, Lawmakers Partying Like It’s 2001

May 13, 2010

Commenting on Senate negotiations over cutting the estate tax below last year’s already-low level, the Wonk Room correctly noted, “We need to be looking at ways to responsibly raise revenues and find cuts in spending that won’t harm already vulnerable residents, not cut taxes for those at the very top of the income scale.”

No Need for Middle Class to Call Their Brokers

April 30, 2010

Yesterday’s Wall Street Journal editorial warns of “the likelihood that the Senate budget resolution dividend tax rate of 39.6% will become law next year. The millions of Americans who receive dividend income — most of them not rich — need to begin adjusting their investment strategy accordingly.”

On Deficits, Tax Cuts Are Part of the Addiction

April 27, 2010

Kudos to the Wall Street Journal’s Gerald Seib for noting in his Capital Journal column today that the country has a major fiscal problem that demands a serious, bipartisan, and balanced policy response. I agree and commend him for the piece.

In this context, here are a few more things to keep in mind on the tax side:

Many Bucks, Little Bang

April 19, 2010

Today’s Washington Post urges Congress to let the Bush tax cuts for people making over $250,000 expire. We agree. As our recent report on this issue noted, the high-income tax cuts are simply unaffordable given the huge projected deficits we face. Federal revenues would be $680 billion lower over the next ten years than if Congress lets them largely expire, as the President has proposed.

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