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Child Tax Credit Expansion Passed by Congress Will Help 13 Million Children
Updated December 5, 2008
A recently enacted Child Tax Credit provision will benefit 12.9 million children — 2.4 million who will become newly eligible for the benefit and 10.5 million who will see their credit increased because of it — according to the Urban Institute-Brookings Institution Tax Policy Center. These almost 13 million children come from families with parents who … -
How Projected Surpluses Became Deficits
September 12, 2008
The federal budget is projected to run a $546 billion deficit in 2009, compared with the $710 billion surplus that budget experts projected for 2009 back when President Bush took office nearly eight years ago. This $1.3 trillion deterioration in the nation’s fiscal finances for 2009 can be seen by comparing estimates that the … -
How Robust Was the 2001-2007 Economic Expansion?
Updated August 29, 2008
Proponents of the 2001 and 2003 tax cuts often argue that the economic and employment growth of the past several years establishes that these tax cuts “worked” and had strong beneficial effects. More recently, some have also argued that, with growth slowing, new tax cuts are needed and would reinvigorate the economy. It now appears likely that the economic expansion that … -
Only a Few of the 2001 and 2003 Tax Cut Provisions Benefit Families with Modest Incomes: But a Superficial Treasury Analysis Obscures this Fact
August 7, 2008
A recent Treasury Department release, “Tax Relief in 2001 Through 2011,” shows the reduction in taxes that four hypothetical families with modest incomes are receiving as a result of “legislation enacted during the President’s term in office.”[1] The implication of the release is that the 2001 and 2003 … -
Smaller Deficit Estimate No Surprise: New OMB Estimates Do Not Support Claims About Tax Cuts
Revised July 13, 2008
The Office of Management and Budget today released a report estimating that revenues for the current fiscal year will be higher, and the deficit lower, than the administration and the Congressional Budget Office projected five months ago. OMB now estimates that the deficit for fiscal year 2007 will be $205 billion, down from the $244 billion estimate in the President’s budget in … -
House-Passed Housing Tax Package Improves Significantly on Senate Version: But Addressing the Foreclosure Crisis Will Require Other Measures
Revised June 17, 2008
On April 10, the Senate passed a bill comprised largely of housing-related tax cuts. [1] Six weeks later, the House passed its own housing legislation including its own package of housing-related tax measures. Some of the provisions in House-passed housing tax package have merit, and the House-passed tax package represents a … -
Claims That a Modest Tax Surcharge on Millionaires Would Damage Small Businesses and the Economy Do Not Withstand Scrutiny
Revised May 22, 2008
Supplemental appropriations legislation that the House of Representatives approved last week (H.R. 2642) would impose a modest income tax surcharge on couples with adjusted gross income above $1 million (and singles with AGI above $500,000) to fund an expansion of higher education benefits for veterans.[1] The surcharge would be … -
Improving the Refundable Child Tax Credit
Revised May 19, 2008
Because of their potential impact in reducing child poverty and hardship, proposals to improve the refundable Child Tax Credit have garnered significant bipartisan support. In the Senate, Olympia Snowe (R-ME) and Blanche Lincoln (D-AR) have introduced legislation that would begin to address key flaws in the credit's structure. In … -
Senate Housing Legislation Highly Disappointing: Less Than One-Fourth of Cost of Senate Bill Goes for Provisions That Will Actually Help Address the Foreclosure Crisis
Revised May 12, 2008
On April 10, the Senate passed legislation that its supporters say will help struggling families hold on to their homes and assist the communities hit hardest by the foreclosure crisis. Measures that would help achieve these goals, however, account for less than one-fourth of the bill’s cost. The remainder of the cost comes … -
Tax Cuts: Myths and Realities
Updated May 9, 2008
Since 2001, the Administration and Congress have enacted a wide array of tax cuts, including reductions in individual income tax rates, repeal of the estate tax, and reductions in capital gains and dividend taxes. Nearly all of these tax cuts are scheduled to expire by the end of 2010. Making them permanent would cost about $4.4 trillion over the next decade (when the cost of … -
Joint Tax Committee Estimate Shows That Tax Gimmick Being Designed To Evade Senate Budget Rules Would Increase Long-Term Deficits
Revised April 26, 2008
House and Senate conferees negotiating an agreement on the tax reconciliation bill are widely reported to have decided to use a change in Roth IRAs to help “offset” the cost of capital gains and dividend tax cuts in years after 2010. If the tax reconciliation bill increases the deficit after 2010, it would violate a Senate rule that a … -
Tax Foundation Figures Do Not Represent Typical Households' Tax Burdens: Figures May Mislead Policymakers, Journalists, and the Public
April 23, 2008
Each year, the Tax Foundation releases a report projecting “Tax Freedom Day,” which it describes as the day when Americans will have “earned enough money to pay this year’s tax obligations at the federal, state, and local levels.”[1] The Tax Foundation’s “Tax Freedom Day” report is plagued by two major problems. First, its … -
Long-Term Social Security Shortfall Smaller Than Cost of Extending Tax Cuts for Top 1 Percent
March 31, 2008
The Social Security trustees’ report issued this week estimates that Social Security faces a total shortfall over the next 75 years of 0.56 percent of Gross Domestic Product (GDP). This is slightly less than the estimated cost over that same period of extending the 2001 and 2003 tax cuts just for the top 1 percent of … -
Extending the President's Tax Cuts and AMT Relief Would Cost $4.4 Trillion Through 2018
Revised March 28, 2008
President Bush continues to urge that the tax cuts enacted in 2001 and 2003 be made permanent. Despite the severe long-term budget shortfalls the nation faces, the Administration has not proposed measures to offset the cost of extending these tax cuts. Nor has it proposed measures to pay for extending relief from the … -
The Skewed Benefits of the Tax Cuts: With the Tax Cuts Extended, Top 1 Percent of Households Would Receive Almost $1.2 Trillion in Tax Benefits Over the Next Decade
Revised March 28, 2008
Under current law, nearly all provisions of the 2001 and 2003 tax cuts are scheduled to expire at the end of 2010. The President’s budget calls for making these tax cuts permanent. The enacted tax cuts and their extension carry a high cost. This raises the question: how would the large sums involved be … -
Capital Gains Tax Cuts Slashed Taxes of Top 400, While Their Incomes SoaredCapital Gains Tax Cuts Slashed Taxes of Top 400, While Their Incomes Soared
March 27, 2008
New Internal Revenue Service (IRS) data show that the 400 U.S. taxpayers with the very highest incomes pay only 18 percent of their income, on average, in federal individual income taxes. The data, published by the Wall Street Journal and the Urban-Brookings Tax Policy Center, provide detailed income and tax information for the 400 tax filers with the highest adjusted gross incomes (AGI) in … -
Have the 2001 and 2003 Tax Cuts Made the Tax Code More Progressive?
March 11, 2008
Supporters of extending the 2001 and 2003 tax cuts claim that these tax cuts’ benefits have been broadly and fairly distributed. Some argue that the tax cuts have actually made the tax system more progressive, pointing to Congressional Budget Office (CBO) data showing that the share of total federal … -
Claim That Congressional Budget Plans Call for "Largest Tax Increase in History" is Inaccurate
March 7, 2008
Some are claiming that the budget plans adopted this week by the House and Senate Budget Committees — the full House and Senate are scheduled to consider their respective committee’s plan next week — would constitute “the largest tax increase in history.” This … -
Fact Sheet: The “Mother of All Distortions” - Attacks on Rangel AMT Plan Not Based On Reality
February 13, 2008
Republican congressional leaders have sharply attacked House Ways and Means Chairman Rangel’s proposal to replace the Alternative Minimum Tax with a tax surcharge for very-high-income households as a massive tax increase that would seriously damage, even “doom,” the economy. In fact, however, the Rangel plan … -
The Rangel AMT Proposal Versus Unpaid-For Repeal of the AMT: Which Is Better Tax Reform?
February 13, 2008
Last fall, House Ways and Means Committee Chairman Charles Rangel introduced major tax legislation (H.R. 3970) that would repeal the Alternative Minimum Tax and finance repeal by imposing an income tax surcharge on high-income households. The package also includes expansions of the Earned Income Tax Credit, refundable Child … -
The Dubious Priorities of the President's FY 2009 Budget
Revised February 7, 2008
The President’s budget would provide more tax cuts heavily skewed to the most well-off while cutting vital services for low- and moderate-income Americans, generating large deficits, and increasing the strain on states already confronting budget problems as a result of the economic downturn. The budget … -
Senate Rebate Proposal Targets More Funds to Low-Income Households, Boosting Stimulus Impact: Lifting Income Cap Reduces Bang-for-the-Buck, But Changes Are an Improvement Overall
Revised February 1, 2008
The stimulus legislation that was adopted by the Senate Finance Committee on Wednesday would make several changes to the House-passed stimulus package, including significant changes to the tax rebate proposal that on balance would make the rebate more effective as stimulus. While retaining the House rebate’s basic structure, the Finance … -
Senate Action Will Not Delay Rebates
January 31, 2008
The facts are clear: Senate action on the stimulus package will not delay the rebates by a single day. The earliest that the IRS can begin to send out rebates is mid-May. No matter how fast Congress enacts the stimulus package, the IRS cannot start issuing the rebates any sooner because it must first process the 2007 … -
President's Expected Push to Make Tax Cuts Permanent is Irresponsible Fiscal and Economic Policy
January 28, 2008
In his State of the Union address this evening, President Bush is expected to renew his push to make his signature tax cuts permanent. In recent weeks, Administration officials have offered three major arguments for this policy — (1) the tax cuts yielded strong economic growth over the past few years, (2) extending them … -
An Analysis Of The Rebate Proposal In The Announced Stimulus Deal
January 25, 2008
The centerpiece of the stimulus deal announced yesterday by House Speaker Nancy Pelosi, House Minority Leader John Boehner, and Treasury Secretary Henry Paulson is a proposal to send rebate checks to 117 million U.S. households. The structure of the proposed rebate, while not ideal from a stimulus standpoint, is far superior to the … -
Tax Policy Center Estimates Show Fewer Than 60 Percent of Working Households Would Benefit In Full From President’s Proposed Rebate
January 22, 2008
The centerpiece of the President’s economic stimulus proposal reportedly is a tax rebate that would be provided by temporarily reducing the 10 percent income tax rate to zero. The plan has been described as featuring a rebate of $800 for individuals and $1,600 for couples. This description, however, is misleading. Only those … -
Another Misdiagnosis: Marginal Rate Reductions and Extensions of Tax Cuts Expiring in 2010 Not the Right Medicine for the Economy’s Current Ills
January 15, 2008
Six months ago, the economy was growing steadily, and the President gave an address in which he claimed that the 2001 and 2003 tax cuts had brought about strong economic growth and should be made permanent to ensure strong growth over the long run.[1] Prominent conservatives recommended a corporate rate cut to make U.S. businesses … -
The Four Pieces of Effective Fiscal Stimulus
January 14, 2008
Recent evidence that the economy has weakened significantly has sparked discussion of possible fiscal stimulus measures. To be effective, such measures must be timely, targeted, and temporary. Timely measures are those that, once triggered, stimulate new spending quickly so that … -
Principles for Fiscal Stimulus Economic Policy in a Weakening Economy
Revised January 11, 2008
The weak December jobs report that the Labor Department issued January 4 is the latest evidence the economy has weakened significantly and is now growing quite slowly. A number of economists continue to believe this slow growth will continue into 2008, but that the economy will avoid slipping into a recession.[1] Some …
