One of the findings is that every income group would face higher personal income taxes in years after 2025 (including 2027). Chained CPI would gradually push taxpayers into higher income tax brackets and make the standard deduction, the Earned Income Tax Credit, and several other breaks less generous over time. The switch to chained CPI would cause some low-income people to face a tax hike starting in 2019, the second year the plan would be in effect.
Tax Reform Debate
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blog November 30, 2017 Chained CPI Would Raise Everyone’s Personal Income Taxes in the Future, Would Hurt the Poor Right Away
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report November 29, 2017 Six More Things to Know About the Senate Tax Plan
A recent ITEP study concluded that the tax bill before the Senate would raise taxes on at least 29 percent of Americans and cause the populations of 19 states to pay more in federal taxes in 2027 than they do today, while providing foreign investors with more benefits than American households. This report delves deeper by breaking out impacts of different components of the Senate tax plan on U.S. taxpayers in 2019 and 2027. This approach leads to several conclusions.
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blog November 22, 2017 Mick Mulvaney and the 19 States Paying Higher Taxes Under the Senate Tax Bill
One of the more surprising findings of ITEP’s recent estimates on the Senate tax bill is that 19 states would pay more overall in federal taxes if the bill becomes law. This is not just an increase in the personal income taxes paid (which would happen in some states under the House bill). This is an increase in their net federal taxes overall, even including the assumed benefits of corporate tax cuts and estate tax cuts.
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report November 18, 2017 Revised Senate Plan Would Raise Taxes on at Least 29% of Americans and Cause 19 States to Pay More Overall
The tax bill reported out of the Senate Finance Committee on Nov. 16 would raise taxes on at least 29 percent of Americans and cause the populations of 19 states to pay more in federal taxes in 2027 than they do today.
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blog November 14, 2017 House Tax Plan Offers an Exceptionally Bad Deal for California, New York, New Jersey, and Maryland
An ITEP analysis reveals that four states would see their residents pay more in aggregate federal personal income taxes under the House’s Tax Cuts and Jobs Act. While some individual taxpayers in every state would face a tax increase, only California, New York, Maryland, and New Jersey would see such large increases that their residents’ overall personal income tax payments rise when compared to current law.
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blog November 13, 2017 House Tax Bill Would Put Property Tax Deduction Out of Reach for Most Households
The House of Representatives is expected to vote this week on a bill that would reduce federal revenues by roughly $1.5 trillion over the next decade. Despite the bill’s high… -
blog November 9, 2017 Flawed Data from House Leadership Attempts to Hide Tax Hikes Under Proposal
In a story published yesterday evening, Politico reported that House leaders have been “working to create customized data models” to show lawmakers that their constituents will not face a tax increase under the tax bill being debated in the House. On this point, House leaders have taken on an impossible task.
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blog November 8, 2017 House Tax Plan Would Make Offshore Tax Avoidance Substantially Worse
The Sunday release of the Paradise Papers has once again brought the issue of offshore tax avoidance to the forefront of public discussion. The papers expose the complex structures that companies such as Apple and Nike have pursued in recent years to pay little to nothing in taxes on their offshore earnings.
Yet even as these revelations make headlines, House Republicans are moving forward with major tax legislation, the Tax Cuts and Jobs Act, that would reward the worst tax avoiders and make it even easier for multinational companies to avoid taxes.
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report November 6, 2017 Analysis of the House Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act, which was introduced on Nov. 2 in the House of Representatives, would raise taxes on some Americans and cut taxes on others while also providing significant savings to foreign investors.
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blog November 6, 2017 House Tax Bill Would Reserve Charitable Giving Subsidies for a Small Subset of Wealthier Households
In the tax policy framework released in September, President Trump and Congressional leadership insisted that their proposal would retain the tax incentive for donating to charity because doing so helps “accomplish important goals that strengthen civil society, as opposed to dependence on government.” Now that the House has released a more detailed proposal, it is finally possible to evaluate exactly how their plans would impact the incentive to donate to charity.
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blog November 5, 2017 Mortgage Interest Deduction Wiped Out for 7 in 10 Current Claimants Under House Tax Plan
Throughout the ongoing federal tax debate, President Trump and Congressional leadership have insisted that while many tax deductions and credits would be wiped out, the mortgage interest deduction would be spared from the chopping block. But while the proposal recently unveiled by House leaders retains the mortgage interest deduction on paper, the actual substance of this policy would be nearly unrecognizable to today’s homeowners.
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blog November 3, 2017 House Plan Slashes SALT Deductions by 88%, Even with $10,000 Property Tax Deduction
One of the most contentious issues in the current federal tax debate is over what to do with the deduction for state and local taxes paid (the SALT deduction). Since the deduction’s benefits vary by state, the House proposal to drastically scale it back has led to an outcry among lawmakers from states such as New York, New Jersey, and California whose constituents would be impacted most dramatically by the change. In an attempt to address those concerns, House leadership agreed to partially retain the deduction for real estate property taxes paid (up to $10,000 per year) while still repealing the deductions for income and sales taxes.
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report November 3, 2017 9 Things You Should Know About the Tax Debate
A Chart Book on the U.S. Tax System
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blog November 1, 2017 House Tax Plan Will Keep 39.6% Top Rate, But That Won’t Matter for Most Types of Income Going to the Rich
In recent days, news that House tax writers will not seek to cut the top personal income tax rate below 39.6 percent on taxable income above $1 million has led some to question whether the newest iteration of the Trump-GOP tax plan will provide a major windfall to the wealthy—a fact that has so far been widely understood. Unfortunately, this second-guessing is unnecessary.
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blog October 25, 2017 The Framework’s Tax Increases and Tax Cuts by State
As our report on the Trump-GOP tax framework explained, in nine states plus the District of Columbia, more than a fifth of households would pay higher taxes under the framework.
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blog October 24, 2017 GOP Tax Plan Will Mainly Benefit Millionaires Even If Top Rate Remains 39.6 Percent
The Trump-GOP taxframework would reduce the top personal income tax rate from 39.6 percent to 35 percent, but now lawmakers are discussing keeping the top personal income tax rate at 39.6 percent for those with taxable income of more than $1 million. This modification would barely change the proposal’s overall impact.
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blog October 20, 2017 The Jig Is Up: Republican Budget Resolution Finally Admits That Deficit Will Soar Under GOP Tax Plan
For some lawmakers, annual deficits matter a lot—unless the nation is paying for tax cuts for the wealthy via deficit spending.
Last night, Republican lawmakers demonstrated that previous grandstanding about the nation’s debt is much ado about nothing. The Senate approved a budget resolution on a party-line vote that would 1. fast-track legislation adding $1.5 trillion to the deficit over 10 years by cutting taxes, and 2. make it easy to enact this measure without a single Democratic vote.
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blog October 19, 2017 The Dishonest Pitch for Trump-GOP Tax Cuts
Real tax reform would mean raising more revenue to make public investments and increasing the progressivity of the tax code. Many conservatives strongly disagree with this and insist that a substantial tax cut for the wealthiest Americans will grow the economy.
Rather than engage in this policy debate based on policy ideals and principles, President Trump, other White House officials and GOP leaders have peppered their sales pitch for tax cuts with false claims about the amount of taxes that Americans pay and the effect the current GOP tax proposal would have on the tax system.
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blog September 29, 2017 Indiana’s Tax Cuts Under Mike Pence Are Not a Model for the Nation
In announcing a new tax cut framework this week in Indianapolis that was negotiated with House and Senate leaders, President Trump claimed that “Indiana is a tremendous example of the prosperity that is unleashed when we cut taxes and set free the dreams of our citizens …. In Indiana, you have seen firsthand that cutting taxes on businesses makes your state more competitive and leads to more jobs and higher paychecks for your workers.”
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report September 13, 2017 Trump Proposals Would Reduce the Share of Taxes Paid by the Richest 1%, Raise It for Everyone Else
The tax proposals released by the Trump Administration in April would reduce the share of total federal, state and local taxes paid by America’s richest 1 percent while increasing the share paid by all other income groups. This clearly indicates that the tax system would be less progressive under the president’s approach.
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ITEP Work in Action September 5, 2017 Arkansas Advocates for Children and Families: The Trump Tax Plan: What Would It Mean for Arkansas?
Who benefits and who loses under the Trump tax plan? An analysis by the Institute on Taxation and Economic Policy (ITEP) estimates that Arkansas would fare worse under the plan compared to other states. Relative to our share of the U.S. population, we would be one of the 12 states receiving the lowest share of the total Trump tax cut.
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ITEP Work in Action September 1, 2017 New Mexico Voices for Children: The Trump Tax Plan Isn’t ‘Reform.’ Here’s Why:
In April the Trump administration released a sketchy outline of their half-baked ideas for tax changes. An analysis by the Washington, D.C.-based Institute for Taxation and Economic Policy (ITEP) of that back-of-the-envelope ‘plan’ found that nearly half (48 percent) of Trump’s proposed tax cuts would go to millionaires. Millionaires make up only 0.5 percent of the U.S. population.
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blog August 31, 2017 Trump (Sort of) Used Our Data on Corporate Tax Avoidance, But He Missed the Point
On Wednesday, reporters waiting to write about President Trump’s much-ballyhooed tax reform speech in Missouri received a fact sheet from the White House informing them that, “Fortune 500 corporations are holding more than $2.6 trillion in profits offshore to avoid $767 billion in Federal taxes, according to the Institute on Taxation and Economic Policy.”
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ITEP Work in Action August 31, 2017 New Mexico Voices for Children: Trump Tax Plan Does Little for NM’s Middle Class
Average New Mexicans would not benefit much from President Trump’s tax reform proposal, which would give the biggest tax breaks to New Mexico’s millionaires. That’s according to a report released recently by the Institute on Taxation and Economic Policy (ITEP).
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ITEP Work in Action August 24, 2017 Maryland Center on Economic Policy: Trump Tax Framework Would Give Away Trillions in Tax Breaks to Millionaires
The Trump administration and congressional leaders are gearing up to overhaul the federal tax code this fall. While many of the details remain fuzzy, one thing is clear: the administration’s top priority is to hand out big tax breaks to millionaires.
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blog August 23, 2017 GOP Leaders Tout Corporate Tax Cuts at Boeing and AT&T, Companies that Already Have Single-Digit Tax Rates
House Speaker Paul Ryan plans to visit a Boeing factory in Washington State tomorrow to promote the GOP’s ideas for tax reform, which include a deep cut in the corporate tax rate, while House Ways and Means Chairman Kevin Brady is bringing the same message today to employees of AT&T in Dallas. What is unclear is how much lower taxes for these companies can possibly go.
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ITEP Work in Action August 17, 2017 Maine Center for Economic Policy: Maine Millionaires Primary Recipients of Proposed Trump Tax Breaks
New analysis from the Institute on Taxation and Economic Policy (ITEP) shows Maine’s millionaires would get an average tax cut of $135,220 under President Trump’s proposed tax plan. Maine millionaires represent only 0.3 percent of all Maine households, yet would receive more than a quarter of all tax breaks.
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report August 17, 2017 Nearly Half of Trump’s Proposed Tax Cuts Go to People Making More than $1 Million Annually
A tiny fraction of the U.S. population (one-half of one percent) earns more than $1 million annually. But in 2018 this elite group would receive 48.8 percent of the tax cuts proposed by the Trump administration. A much larger group, 44.6 percent of Americans, earn less than $45,000, but would receive just 4.4 percent of the tax cuts.
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blog July 28, 2017 Art Laffer and Stephen Moore’s Misleading Case for the Trump Tax Cuts
Art Laffer and Stephen Moore recently penned an op-ed in the Wall Street Journal in which they called on state and local policymakers to support the Trump tax cuts. They claimed that the Trump plan would provide a significant boost to state and local tax revenues, thereby allowing states with large budget deficits to “regain fiscal health.”
State and local lawmakers should not be fooled by these claims. The reality is that Trump’s tax cuts are more likely to worsen state and local fiscal health than improve it.
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blog July 27, 2017 GOP Leaders in Congress and the White House Set Out Goals for Tax Reform that Their Plans Fail to Meet
Today Republican leaders in Congress and officials from the White House released a joint statement on tax reform, claiming that “the single most important action we can take to grow our economy and help the middle class get ahead is to fix our broken tax code for families, small business, and American job creators competing at home and around the globe.”
Unfortunately, the proposals they have put forward so far do not address any such goals.
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blog July 26, 2017 Trump Touts Tax Cuts for the Wealthy as a Plan for Working People
Unless the administration takes a radically different direction on tax reform from what it has already proposed, its tax plan would be a monumental giveaway to the top 1 percent. The wealthiest one percent of households would receive 61 percent of all the Trump tax breaks, and would receive an average of $145,400 in 2018 alone.
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ITEP Work in Action July 21, 2017 Florida Policy Institute: The Growing Divide: Federal Tax Plan Would Give Massive Tax Cuts to Wealthy Floridians as the Poorest Americans Continue to Struggle
The federal tax plan broadly outlined by the current administration would do very little to create opportunities for Floridians struggling to make ends meet. Instead, the tax plan would provide massive tax cuts for Florida’s highest income earners, accordingly to a recent report by the Institute on Taxation and Economic Policy (ITEP). Broadly outlined, the plan is likely to make an already unfair tax system that favors the wealthy even worse.
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ITEP Work in Action July 21, 2017 New Jersey Policy Perspectives: Trump Tax Plan: A Boon for the Wealthiest New Jerseyans
A federal tax package based on President Trump’s April outline would fail to deliver on its promise of mostly helping the middle class, instead showering most of its help to the richest 1 percent, according to a new 50-state analysis from the Institute on Taxation and Economic Policy released today.
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ITEP Work in Action July 21, 2017 Hope Policy Institute: Mississippi’s Wealthiest Get the Most Benefit under New Federal Tax Cut Proposal
New research from the Institute on Taxation and Economic Policy (ITEP) looks at the potential effects of a tax cut proposal from the Trump Administration on families in the 50 states. The tax cut proposal would reduce the tax rate on corporate income from 35 percent to 15 percent, would repeal the estate tax, replace the current income tax brackets with three brackets at 10 percent, 25 percent, and 35 percent, eliminate most itemized deductions, except charitable giving and home mortgage interest, and create a new tax credit for childcare expenses, among other things.
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ITEP Work in Action July 21, 2017 Kentucky Center for Economic Policy: Trump Tax Plan Would Be a Windfall for Only the Wealthiest Kentuckians
The wealthiest Kentuckians would be winners from the $4.8 trillion in federal tax cuts President Donald Trump has proposed, as shown by a new report from the Institute on Taxation… -
ITEP Work in Action July 20, 2017 West Virginia Center on Budget & Policy: New Report Shows Trump Tax Plan Benefits Wealthy, Fails to Help Middle Class
A new analysis from the Institute on Taxation and Economic Policy reveals a federal tax reform plan based on President Trump’s April outline would fail to deliver on its promise of largely helping middle-class taxpayers, showering 61.4 percent of the total tax cut on the richest 1 percent nationwide. In West Virginia, the top 1 percent of the state’s residents would receive an average tax cut of $51,600 compared with an average tax cut of $720 for the bottom 60 percent of taxpayers in the state.
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ITEP Work in Action July 20, 2017 Economic Progress Institute: Trump Tax Plan Would Mostly Benefit Wealthiest Rhode Island Taxpayers
A new analysis from the Institute on Taxation and Economic Policy reveals a federal tax reform plan based on President Trump’s April outline would fail to deliver on its promise of largely helping middle-class taxpayers, showering 61.4 percent of the total tax cut on the richest 1 percent nationwide. In Rhode Island, the top 1 percent of the state’s residents would receive an average tax cut of $86,610 compared with an average tax cut of just $430 for the bottom 60 percent of taxpayers in the state.
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ITEP Work in Action July 20, 2017 Maine Center for Economic Policy: Trump Tax Plan Would Give Richest Maine Taxpayers an Average $53,000 Tax Cut and Trigger Deep Cuts to Federal Dollars for Maine
A new analysis from the Institute on Taxation and Economic Policy reveals a federal tax reform plan based on President Trump’s April outline would fail to deliver on its promise of helping middle-class taxpayers, showering three out of every five dollars of the total tax cut on the richest 1 percent nationwide. In Maine, the top 1 percent of the state’s residents would receive an average tax cut of $53,000 compared with an average tax cut of $400 for the bottom 60 percent of taxpayers in the state.
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report July 20, 2017 Trump’s $4.8 Trillion Tax Proposals Would Not Benefit All States or Taxpayers Equally
The broadly outlined tax proposals released by the Trump administration would not benefit all taxpayers equally and they would not benefit all states equally either. Several states would receive a share of the total resulting tax cuts that is less than their share of the U.S. population. Of the dozen states receiving the least by this measure, seven are in the South. The others are New Mexico, Oregon, Maine, Idaho and Hawaii.
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report July 17, 2017 Comment Letter on Tax Reform to Senate Finance Chairman
This letter outlines ITEP’s two broad objectives for meaningful federal tax reform and discusses six recommendations that would achieve them.
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blog July 6, 2017 Why We Need to End the Era of Anonymous Shell Corporations
What do terrorists, opioid and human traffickers, corrupt government officials and tax evaders have in common? They all depend on the secrecy provided by anonymous shell corporations to allow them to finance and profit from their crimes. Momentum is building in the House and Senate to pass legislation that would strike against illicit finance in the United States and around the world by bringing an end to the anonymity provided by U.S. incorporation.
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report June 29, 2017 Trump Budget Uses Unrealistic Economic Forecast to Tee Up Tax Cuts
The Trump Administration recently released its proposed budget for Fiscal Year 2018. The administration claims that its proposals would reduce the deficit in nearly every year over the next decade before eventually achieving a balanced budget in 2027, but the assumptions it uses to reach this conclusion are deeply flawed. This report explains these flaws and their consequences for the debate over major federal tax changes.
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blog June 16, 2017 The GOP Health Plan Cuts Medicaid to Lower Taxes for the Richest 3 Percent
The bill passed by the House of Representatives last month to repeal the Affordable Care Act (ACA) is the most unpopular legislation in decades.
Lawmakers should reverse course and take the necessary time to put together legislation that would preserve or, better yet, improve access to health care. But this isn’t likely to happen because at its core, the American Health Care Act isn’t truly health care reform. It is tax cuts that disproportionately benefit the rich shrouded in legislative provisions that would weaken the existing health care law.
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blog June 15, 2017 Which States Benefit from the Tax Cuts in the GOP Health Plan?
Congressional Republicans’ plans to repeal the two largest tax increases on individuals that were enacted as part of the Affordable Care Act (ACA) would disproportionately benefit residents of Connecticut, New York, the District of Columbia and 10 other states. The remaining states would receive a share of the tax cuts that is less than their share of the total U.S. population.
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blog June 12, 2017 The Best Way to Radically Simplify Tax Filing
One of the supposed selling points of the House GOP’s “Better Way” tax plan is that it will make the tax system so simple that you could do your taxes on a postcard. The reality, however, is that their promised postcard is a deception that would require numerous additional pages of worksheets to fill out. A better solution to making tax preparation simpler is called “return-free filing.” It does not just reduce your work to filling out a postcard, it could eliminate it altogether.
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blog June 8, 2017 Kansas May Have Saved Us All
Sitting in the National Museum of American History in Washington, DC, hidden in the jumble of Americana like Thomas Jefferson’s desk, Michelle Obama’s inaugural gown and the ruby slippers worn in the Wizard of Oz, is a napkin with a drawing on it. Probably one of the least known exhibits in the museum, this napkin, quietly hiding behind glass lest some child wandering from a school group wipe his nose on it, has on several occasions destroyed the finances of the federal government and several state governments, most recently in Kansas.
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blog May 25, 2017 Congressional Hearing Highlights Problems with the Border Adjustment Tax
The debate over the so-called border adjustment tax (or BAT) took center stage this week when the House Ways and Means Committee held its first hearing on the topic. Despite strong support by the House Republican leadership and the Chairman of the Ways and Means Committee, Rep. Kevin Brady, the proposal faced an onslaught of criticism during the hearing from invited witnesses and members of both parties.
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blog May 22, 2017 ITEP’s Commitment to Being a Voice for Low-, Moderate- and Middle-Income People in Tax Policy Debates
A strong voice for working people in federal and state tax policy debates is absolutely critical. Sound, progressive tax policies make all the difference between high-quality educational systems or crowded classrooms with limited resources. They account for the difference between structurally sound roads and bridges or potholes and other crumbling infrastructure. At the federal level, good tax policy means raising enough revenue so the nation can adequately fund child care and early education, health care, food inspection, national parks, and a clean, safe environment among other things.
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blog May 5, 2017 Key Resources for Digging into the Trump and GOP Tax Reform Agenda
President Donald Trump’s tax sketch released in late April is the starting point for federal tax reform discussions. For now, the sketch includes too few details to properly analyze its… -
report April 27, 2017 What Real Tax Reform Should Look Like
If lawmakers truly want to create an environment in which economic mobility is possible for more working people, budget-busting tax cuts are the wrong way to achieve this goal. Dramatic tax giveaways would force cuts to programs that provide early education, health care, job training, affordable housing, nutrition assistance, and other vital services that promote economic mobility. Further, current tax proposals from Congress and the Trump Administration defy what most Americans would consider true reform and, instead, embrace supply-side economic theories. This policy brief outlines two sensible, broad objectives for meaningful federal tax reform and discusses six tax policies that can help achieve these objectives.