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The Reality of Raising Taxes at the Top, Part 1: Would Tax Hikes Shrink Taxable Income?

April 25, 2012

This blog series, based on a major new CBPP report, will look at the different ways in which raising taxes on high-income people might affect economic growth, starting with its impact on their taxable income...

Corporate Tax Reform Must Be Gimmick-Free

February 28, 2012

The President’s framework for corporate tax reform affirms an extremely important principle: reform must not rely on budget gimmicks to hide its true long-term cost:

While a number of the measures that raise revenue in...

Tax Preference for Capital Gains Doesn’t Make Sense

January 23, 2012

Great blog posts by our colleague Jared Bernstein and by Syracuse University professor Len Burman explain why the preferential tax treatment for capital gains — the gains from selling stocks, bonds, and other assets, which face a top tax rate of 15 percent, well below the top rates for ordinary income — is unjustified.

In two posts, Bernstein demonstrates that there is...

OECD: Tax and Spending Policy Can Push Against Rising Inequality

December 13, 2011

A number of reports on the recent income inequality study by the Organisation for Economic Co-operation and Development (OECD) have highlighted the finding that the United States ranks fourth in inequality among OECD countries. This ranking uses the “Gini” index of the distribution of “market income” —...

Senate Balanced Budget Amendment Goes Far Beyond European Budget Rules

December 6, 2011

The Senate will vote this month on a constitutional balanced budget amendment that would require a balanced federal budget every year, regardless of the state of the economy, unless two-thirds of the House and Senate overrode that requirement.  While some proponents point to balanced budget requirements in some European countries as evidence that the United States should adopt one, too, no...

Why the Tax System Is Doing Less About Growing Inequality

November 4, 2011

As we have explained, the joint congressional “supercommittee” — and any future efforts at deficit reduction — should raise significant revenues, and do so progressively. A recent Congressional Budget Office (CBO) report highlights why.

It shows not only that income inequality has dramatically increased in recent decades (a point that we have previously discussed), but also that “the increase in inequality of after-tax income was greater than the increase in inequality of before-tax income.” That is, the federal tax system as a whole did less to equalize the distribution of income in 2007 than it did in 1979.

Congressional Research Service Confirms: “Current U.S. Tax System Violates the Buffett Rule”

October 13, 2011

When President Obama enunciated the so-called “Buffett Rule”— that millionaires shouldn’t pay lower tax rates than middle-income families — he raised an obvious question: how many millionaires are we talking about? A new study by the Congressional Research Service (CRS) concludes: