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.
Tax Reform Options and Challenges
In addition to distributional analyses of existing and proposed tax law, ITEP provides policy recommendations for lawmakers to build a more equitable tax code, from progressive revenue-raising options to corporate tax reform to establishing a model for a wealth tax.
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report October 28, 2019 Benefits of a Financial Transaction Tax
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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blog December 17, 2018 Five Things to Know on the One-Year Anniversary of the Tax Cuts and Jobs Act
While it has only been a year since passage of the Tax Cuts and Jobs Act (TCJA), it’s clear the law largely is both a debacle and a boondoggle. Below are the five takeaways about the legacy and continuing effect of the TCJA.
1. The Tax Cuts and Jobs Act will substantially increase income, wealth, and racial inequality.
2. The Tax Cuts and Jobs Act will continue to substantially increase the deficit.
3. The Tax Cuts and Jobs Act is not significantly boosting growth or jobs.
4. The Tax Cuts and Jobs Act continues to be very unpopular.
5. Despite the Tax Cuts and Jobs Act’s lack of popularity and ill effects, many Republican lawmakers are calling for even more tax cuts for the wealthy and corporations. -
blog December 12, 2018 End-of-Year Tax Measure Would Give Deficit-Financed Tax Cuts to Wealthy Families and Corporations
Outgoing Ways and Means Chairman Rep. Kevin Brady (R-TX) today introduced legislation that includes $80 billion in tax cuts that are unpaid for and largely benefit the wealthy. The bill would, among its numerous provisions, expand retirement and education savings programs that offer very little value to low-income families, delay the Health Insurance Tax for an additional two years, and delay the Medical Device Tax for an additional five years.
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report December 6, 2018 The Federal Estate Tax: An Important Progressive Revenue Source
For years, wealth and income inequality have been widening at a troubling pace. One study estimated that the wealthiest 1 percent of Americans held 42 percent of the nation’s wealth in 2012, up from 28 percent in 1989. Lawmakers have exacerbated this trend by dramatically cutting federal taxes on inherited wealth, most recently by doubling the estate tax exemption as part of the 2017 Tax Cuts and Jobs Act. Further, lawmakers have done little to stop aggressive accounting schemes designed to avoid the estate tax altogether. This report explains how the percentage of estates subject to the federal estate tax has dropped dramatically from 2.16 percent in 2000 to just 0.06 percent in 2018, a 34-fold decrease in 19 years.
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report November 14, 2018 A Fair Way to Limit Tax Deductions
The cap on federal tax deductions for state and local taxes (SALT) that is in effect now under the Tax Cuts and Jobs Act (TCJA) is a flawed provision but repealing it outright would be costly and provide a windfall to the rich. Congress should consider replacing the SALT cap with a different type of limit on deductions that would avoid both of these outcomes. Using the ITEP microsimulation tax model, this report provides revenue estimates and distributional estimates for several such options, assuming they would be in effect in 2019.
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blog November 8, 2018 The Post-Midterms Tax Policy Outlook: Small Ball and Real Tax Reform Debate
With most of the results of the 2018 midterm elections in, the broad landscape for federal tax policy over the next couple years is coming into view. Democratic control of the House and Republican control of the Senate means a significant tax overhaul is unlikely, but minor tax changes may happen. And the run-up to the 2020 presidential election will force more robust debate over the impact of the Tax Cuts and Jobs Act (TCJA) and what aspects of the legislation should be repealed, reformed, or built upon.
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blog October 24, 2018 Shaking up TCJA: How a Proposed New Credit Could Shift Federal Tax Cuts from the Wealthy and Corporations to Working People
A new federal proposal, the Livable Incomes for Families Today (LIFT) the Middle Class Act, would create a new refundable tax credit for low- and middle-income working families who were little more than an afterthought in last year’s federal tax overhaul. This proposal would take the place of TCJA, providing tax cuts similar in cost to the recent federal tax law but targeted toward working people rather than the wealthy. ITEP analyzed the bill, proposed by California Senator Kamala Harris, and compared its potential impact to TCJA.
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blog October 23, 2018 Tax Policies Have Increased Inequality, and So Would Entitlement Cuts
Conversations about economics often take place on different planets, it seems. Economists and analysts note rising inequality in America. And it’s not just lefty analysts. The credit ratings firm Moody’s chimed in earlier this month, warning that inequality “is a key social consideration that will impact the U.S.’ credit profile through multiple rating factors, including economic, institutional and fiscal strength.”
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report October 11, 2018 ITEP Comments and Recommendations on Proposed Section 170 Regulation (REG-112176-18)
The IRS recently proposed a commonsense improvement to the federal charitable deduction. If finalized, the regulation would prevent not just the newest workarounds to the $10,000 deduction for state and local taxes (SALT), but also a longer-running tax shelter abused by wealthy donors to private K-12 school voucher programs. ITEP has submitted official comments outlining four key recommendations related to the proposed regulation.