As states cut everything from education to health care to address historic budget shortfalls, the last thing they need is for Congress to undercut an important revenue source for many of them. But that’s exactly what would happen if Congress eliminated the federal tax deduction for state-level estate and inheritance tax payments.
BEYOND THE NUMBERS
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.”
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.”
Following up our post yesterday about the Peterson Foundation’s National Fiscal Summit, here’s a bit of what the Center’s executive director, Robert Greenstein, had to say:
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:
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.
Most Americans say their income taxes are fair, a new New York Times/CBS News poll finds. No wonder — for the most part, we’re paying a much smaller chunk of our income in taxes than we did a few decades ago.
This year, a family of four in the middle of the income spectrum will pay less than a nickel out of every dollar it earns in federal income taxes. (It will pay more than this in federal payroll taxes.)
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