One of the biggest problems with the U.S. tax code in terms of fairness is that investment income, which mostly flows to the rich, is taxed less than the earned income that makes up all or almost all of the income that working people live on.
Tax Reform Options and Challenges
-
blog February 19, 2020 How Democratic Presidential Candidates Would Raise Revenue
-
blog February 4, 2020 Washington Is Finally Having the Right Conversation about Taxes
Presidential candidates and some elected officials are finally talking about bold tax policy ideas that would increase taxes and raise revenue. This is a dramatic shift from when a radical, right-wing narrative dominated the public debate. Republicans redefined “fiscal responsibility” as fewer taxes and less government, peddled supply-side economic theories, and denied the clear evidence that tax cuts were adding to our nation’s deficits.
-
blog January 29, 2020 ITEP Urges IRS to End SALT Workaround Scheme for Businesses
A new IRS proposal could once again allow wealthy business owners to use state charitable tax credits–including tax credits for donating to support private and religious K-12 schools–to dodge the federal government’s $10,000 cap on state and local tax (SALT) deductions.
-
blog December 19, 2019 Corporate Tax Avoidance Is Mostly Legal—and That’s the Problem
As usual, corporate spokespersons and their allies are trying to push back against ITEP’s latest study showing that many corporations pay little or nothing in federal income taxes. One way they respond is by stating that everything they do is perfectly legal. This is an attempt by the corporate world to change the subject. The entire point of ITEP’s study is that Congress has allowed corporations to avoid paying taxes, and that this must change.
-
report December 16, 2019 Corporate Tax Avoidance in the First Year of the Trump Tax Law
Profitable Fortune 500 companies avoided $73.9 billion in taxes under the first year of the Trump-GOP tax law. The study includes financial filings by 379 Fortune 500 companies that were profitable in 2018; it excludes companies that reported a loss.
-
blog December 11, 2019 House Democrats’ Latest Bill on SALT Deductions Would Mean Bigger Tax Cuts for the Rich
ITEP estimates show that if the House Democrats’ proposal was in effect in 2022, it would have a net cost of $81 billion in that year alone. The estimates also show that 51 percent of the benefits would go to the richest 1 percent of taxpayers in the U.S. Clearly, lawmakers concerned about the SALT cap need to go back to the drawing board.
-
blog October 30, 2019 There’s a lot more to Corporate Tax Reform than Tax Rates
Several Democratic candidates have proposed raising the statutory corporate tax rate from its current level of 21 percent to fund their spending proposals. Political reporters and observers may read a great deal into the different corporate rates proposed by candidates, but the truth is that rates mean very little on their own.
-
report October 28, 2019 Benefits of a Financial Transaction Tax
A financial transaction tax (FTT) has the potential to curb inequality, reduce market inefficiencies, and raise hundreds of billions of dollars in revenue over the next decade. Presidential candidates have proposed using an FTT to fund expanding Medicare, education, child care, and investments in children’s health. Any of these public investments would be progressive, narrowing resource gaps between the most vulnerable families and the most fortunate.
-
blog October 15, 2019 Emmanuel Saez and Gabriel Zucman’s New Book Reminds Us that Tax Injustice Is a Choice
Cue Emmanuel Saez and Gabriel Zucman. In their new book, The Triumph of Injustice, the economists, who already jolted the world with their shocking data on exploding income inequality and wealth inequality, tell us to stop acting like we are paralyzed when it comes to tax policy. There are answers and solutions. And in about 200 surprisingly readable pages, they provide them.
-
blog October 2, 2019 How a Federal Wealth Tax Can Help the Economy
A New York Times article explained that proponents of a federal wealth tax hope to address exploding inequality but then went on to list the fears of billionaires and economic policymakers, finding that “the idea of redistributing wealth by targeting billionaires is stirring fierce debates at the highest ranks of academia and business, with opponents arguing it would cripple economic growth, sap the motivation of entrepreneurs who aspire to be multimillionaires and set off a search for loopholes.” A wealth tax will not damage our economy and instead would likely improve it. Here’s why.
-
blog September 12, 2019 Sen. Wyden’s Anti-Deferral Accounting Proposal Could Be a Game-Changer
Today, Sen. Ron Wyden, the ranking Democrat on the Senate Finance Committee, fulfilled a promise he made several months ago to release a proposal that could fundamentally transform how the… -
report September 10, 2019 Major Federal Tax Credit Proposals
In 2019, several federal lawmakers have introduced tax credit proposals to significantly expand existing tax credits or create new ones to benefit low- and moderate-income people. While these proposals vary a great deal and take different approaches, all build off the success of the EITC and CTC and target their benefits to families in the bottom 60 percent of the income distribution who have an annual household income of $70,000 or less.
-
blog August 28, 2019 Updated Estimates from ITEP: Trump Tax Law Still Benefits the Rich No Matter How You Look at It
President Trump’s allies in Congress continue to defend their 2017 tax law in misleading ways. Just last week, Republicans on the House Ways and Means Committee stated that most “of the tax overhaul went into the pockets of working families and Main Street businesses who need it most, not Wall Street.” ITEP’s most recent analysis estimates that in 2020 the richest 5 percent of taxpayers will receive $145 billion in tax cuts, or half the law’s benefits to U.S. taxpayers.
-
blog August 13, 2019 IRS’s SALT Workaround Regulations Should be Strengthened, Not Rejected
Lawmakers are seeking to achieve a backdoor repeal of the $10,000 cap on deductions for state and local taxes paid (SALT) by invalidating recent IRS regulations that cracked down on schemes that let taxpayers dodge the cap. If successful, their efforts would drain tens of billions of dollars from federal coffers each year, with the vast majority of the benefits going to the nation’s wealthiest families.
-
blog July 31, 2019 A Wealth Tax Might Be Easier to Implement than You Think
A direct federal tax on wealth, as described in a January report from ITEP and proposed by Sen. Elizabeth Warren, could raise substantial revenue to make public investments, curb rising inequality, and is supported by a large majority of Americans. But would it work? Recent research highlighted in a new academic paper outlines approaches that would make it easier than you might think.
-
blog June 27, 2019 Wealth Tax Is Supported by Basically Everyone Who Is Not a Politician
A February survey found that 61 percent of registered voters supported a wealth tax proposal, including 51 percent of Republican voters. And it’s not just the non-rich wanting to tax the very rich. A June survey found that 60 percent of millionaires support the idea.
-
blog June 25, 2019 What to Watch for on Tax Policy During the Presidential Primary
America needs a new tax code. The Democratic presidential debates beginning this week present an opportunity for candidates to make clear how they would address inequality or to raise enough revenue to make public investments that make the economy work for everyone. Here are some of the big tax issues that we hope they will touch on.
-
blog June 24, 2019 The SALT Cap Isn’t Harming State and Local Revenues. Myths About It May Be.
A House Ways and Means subcommittee hearing on Tuesday will explore a highly controversial provision of the Tax Cuts and Jobs Act (TCJA) that prevents individuals and families from writing off more than $10,000 in state and local tax (SALT) payments on their federal tax forms each year. The focus of the hearing will be whether the cap negatively affects state and local revenue streams that fund schools, firefighters, and other services. There are at least three ways this could happen though only one of those is plausible, and it’s not the one that the organizers of this hearing likely expected.
-
blog June 5, 2019 ITEP Resources on Proposed SALT Workaround Regulations
After states implemented laws that allow taxpayers to circumvent the new $10,000 cap on deductions for state and local taxes (SALT), the IRS has proposed regulations to address this practice. It’s a safe bet the IRS will try to crack down on the newest policies that provide tax credits for donations to public education and other public services, but it remains to be seen whether new regulations will put an end to a longer-running practice of exploiting tax loopholes in some states that allow public money to be funneled to private schools.
-
blog February 13, 2019 Fact-Checking on Trump Tax Law Needs a Fact Check
The Tax Cuts and Jobs Act (TCJA), enacted by President Trump and Congressional Republicans at the end of 2017, has caused quite a bit of confusion, and a recent “Fact Checker” column by the Washington Post’s Glenn Kessler does not help. TCJA created real problems that can’t be resolved without real tax reform. To begin that process fact checkers, lawmakers, and everyone else need to be clear about what TCJA did, and did not, do to our tax system.
-
blog February 5, 2019 New ITEP Report Shows How Congress Can Meet Public Demand for Progressive Taxes
A recent headline tells us that bold tax plans proposed by lawmakers today reflect a “profound shift in public mood.” But, in fact, the public’s mood has not changed at all. Americans have long wanted progressive taxes but few, if any, lawmakers publicly backed this view. What’s happening now isn’t a shift in public opinion, rather it’s Washington finally catching up with the American people.
-
report February 5, 2019 Progressive Revenue-Raising Options
America has long needed a more equitable tax code that raises enough revenue to invest in building shared prosperity. The Tax Cuts and Jobs Act (TCJA), enacted at the end of 2017, moved the federal tax code in the opposite direction, reducing revenue by $1.9 trillion over a decade, opening new loopholes, and providing its most significant benefits to the well-off. The law cut taxes on the wealthy directly by reducing their personal income taxes and estate taxes, and indirectly by reducing corporate taxes.
-
blog February 1, 2019 Senator Sanders Proposes to Reform the Estate Tax
Progressive tax proposals are finally being discussed with the urgency and seriousness they deserve. Following Rep. Alexandria Ocasio-Cortez’s call for a much higher marginal tax rate for multi-millionaires and Sen. Elizabeth Warren’s proposal to introduce a wealth tax for those at the very top, Sen. Bernie Sanders has introduced a revised version of his proposal to reform the federal estate tax.
-
blog January 8, 2019 How to Think About the 70% Top Tax Rate Proposed by Ocasio-Cortez (and Multiple Scholars)
The uproar deliberately steers clear of any real policy discussion about what a significantly higher marginal tax rate would mean. Her critics are mostly the same lawmakers who enacted a massive tax cut for the rich last year that was not debated seriously or supported by serious research. Meanwhile, multiple scholarly studies conclude a 70 percent top tax rate would be an optimal way to tax the very rich. Ocasio-Cortez has brought more attention to the very real need to raise revenue and do it in a progressive way.