Senator Sessions has filed an amendment to the Senate immigration bill that would deny the Earned Income Tax Credit to hundreds of thousands of taxpayers ... Read more
As early as next week, the Senate Finance Committee is expected to vote on legislation restructuring the higher education tax credits. The federal tax code ... Read more
Key Findings Currently, federal tax credits for higher education are largely unavailable to low-income students and are also unavailable to many moderate-income students. This limitation substantially reduces the credits’ effectiveness in encouraging students who would not otherwise attend college to do so. Low-income students who do attend college frequently face high costs of attendance, even after taking into account governmental and institutional aid. According to Department of Education statistics, 85 percent of undergraduates from families with incomes below $20,000 had unmet financial need in 2003-2004 that averaged thousands of dollars per student. Making the higher education tax credits available to low- and moderate-income students would require making the credits refundable. About a third of all households, and almost half of families with children, have no federal income tax liability. Very few of these households can benefit in full from the current, nonrefundable tax credits, and many cannot benefit at all. Expanding the definition of qualifying expenses also would be an important reform. Currently, non-tuition costs such as room and board and books - which make up the majority of out-of-pocket expenses for low- and moderate-income students - count as qualifying expenses for education tax incentives aimed at upper-income students, but not for the education tax credits. Read more
Key Findings This analysis lays out three criteria for assessing AMT reform proposals. Are the reforms fully paid for, so they do not add hundreds of billions of dollars to deficits? Are the reforms well targeted, so they protect middle-income taxpayers from the AMT without spending billions on massive tax cuts for the highest-income households? Are the reforms permanent, so they actually resolve the AMT issue, instead of leaving policymakers facing even larger costs for AMT relief a few years from now? Read more
In a new study, Thomas Piketty and Emmanuel Saez, economists who have done groundbreaking work on the historical evolution of income inequality in the United ... Read more
In a new study, Thomas Piketty and Emmanuel Saez, economists who have done groundbreaking work on the historical evolution of income inequality in the United ... Read more
Commerce Department data released today show that the share of national income going to wages and salaries in 2006 was at its lowest level on ... Read more
Each year, the Tax Foundation releases a report projecting “Tax Freedom Day,” which it describes as the day when “Americans will finally have earned enough ... Read more
This week, the House of Representatives will consider the budget resolution that the House Budget Committee approved March 22. The House Budget Committee plan adheres ... Read more
Key Findings Tax-cut supporters often claim that the reductions in the top income tax rates enacted in 2001 are vitally important to small business owners. In fact, just 1.3 percent of tax filers with small business income benefited in 2004 from the reduction in the top income tax rate enacted in 2001. Just 2.6 percent benefited from the reductions in either of the top two tax rates. Over half of the tax cuts that have gone to households with small business income have gone to the 8 percent of such households with incomes exceeding $200,000 a year. Most small business owners have not received large tax cuts. The Administration classifies all wealthy investors with passive business investments as “small business owners,” regardless of whether they have anything to do with operating the business in question or have ever set foot in it. Under the Administration’s definition, President Bush and Vice President Cheney are classified as “small business owners.” Read more
