Tax Reform Options and Challenges
197 posts
End-of-Year Tax Measure Would Give Deficit-Financed Tax Cuts to Wealthy Families and Corporations
• By ITEP Staff
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.
The Federal Estate Tax: An Important Progressive Revenue Source
• By ITEP Staff
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…
A Fair Way to Limit Tax Deductions
• By Carl Davis, Steve Wamhoff
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…
The Post-Midterms Tax Policy Outlook: Small Ball and Real Tax Reform Debate
• By Richard Phillips
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)…
Shaking up TCJA: How a Proposed New Credit Could Shift Federal Tax Cuts from the Wealthy and Corporations to Working People
• By Aidan Davis
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…
Tax Policies Have Increased Inequality, and So Would Entitlement Cuts
• By Steve Wamhoff
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.”
ITEP Comments and Recommendations on Proposed Section 170 Regulation (REG-112176-18)
• By Carl Davis
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.
U.S. House Advances More Unpopular Tax Cuts That Primarily Benefit the Wealthy
• By Alan Essig
The U.S. House this week voted on so-called Tax Cuts 2.0, a package of three tax bills that, among other things, would make permanent temporary provisions in the Tax Cuts and Jobs Act. Alan Essig, ITEP’s executive director, said the following: “While top-heavy tax cuts and their inevitable effect of decimating public investments may seem peripheral to today’s news cycle, they are emblematic of the governing philosophy of those in power today.”
We Crunched Some Numbers to Show What Tax Reform for Working People Really Looks Like
• By ITEP Staff
Throughout President’s Trump’s presidential campaign and from his first day in office until now, his administration has favored and promoted policies that benefit the wealthy and corporations even as it claims to be the working people’s champion. If more recent economic data are a reflection of what we’ll see in the long-term due to the Trump Administration’s recent tax cuts, wealth will continue to accrue at the top while income remains stagnant or barely budges…
How Opportunity Zones Benefit Investors and Promote Displacement
• By ITEP Staff
The idea behind the new tax break is to provide an incentive for wealthy individuals to invest in the economies of struggling communities. Despite alleged intentions, it appears opportunity zones are turning into yet another windfall for wealthy investors and may encourage displacement of people in low-income areas, working against the provision’s intended goal.
The Preferential Tax Treatment of Capital Gains Income Should Be Curbed, Not Substantially Expanded
• By Richard Phillips
For true believers in supply-side economics, however, one major flaw of the TCJA is that it did not further cut taxes for the wealthy by reducing capital gains tax rates. But now the Trump Administration is considering using executive action to remedy this by indexing capital gains to inflation for tax purposes.
Understanding and Fixing the New International Corporate Tax System
• By Richard Phillips
The Tax Cuts and Jobs Act (TCJA) radically changed the international tax system. It slashed taxes on corporate income, both domestic and foreign. It encouraged U.S. multinational corporations to shift jobs, profits, and tangible property abroad, and keep intangibles home. This report describes the new international tax system—and its many gaps—and also provides a road map for how to fix these gaps and surveys recent legislative approaches.
The Immediate Economic Impact of the Tax Cuts and Jobs Act Could be Even Less Than Expected
• By Richard Phillips
Now, new research from the Federal Reserve Bank of San Francisco finds that the Tax Cuts and Jobs Act may not be so much of a stimulus after all. In other words, lawmakers have left themselves with few options should the country face an economic recession, and the country may not receive a substantive economic benefit in the short term.
Federal Tax Cuts in the Bush, Obama, and Trump Years
• By Steve Wamhoff
Since 2000, tax cuts have reduced federal revenue by trillions of dollars and disproportionately benefited well-off households. From 2001 through 2018, significant federal tax changes have reduced revenue by $5.1 trillion, with nearly two-thirds of that flowing to the richest fifth of Americans.
New Legislation Would Close Significant Offshore Loopholes in the Tax Cuts and Jobs Act
• By Richard Phillips
One simple rule should drive the nation’s international tax policies: tax the offshore profits of American companies the same way their domestic profits are taxed. The latest legislation to approach that ideal is the Per-Country Minimum Act (H.R. 6015), from Rep. Peter DeFazio (D-OR). The DeFazio bill closes the loophole that allows corporations to use foreign tax credits to shelter profits in tax havens from U.S. taxes. No other bill addresses this.
Debate Over New Jersey’s Millionaires and ITEP’s Data
• By Steve Wamhoff
New Jersey’s new governor, Phil Murphy campaigned on a promise to raise state income taxes on millionaires, a proposal that is supported by 70 percent of the state and was, until recently, backed by New Jersey’s Senate President, Steve Sweeney. In recent months, Sweeney changed his position on the proposed millionaires tax and called for an increase in New Jersey’s corporate tax instead. The idea of hiking taxes on corporations is not a bad one,…
There Is No Evidence That the New Tax Law Is Growing Our Economy or Creating Jobs
• By Steve Wamhoff
The House Ways and Means Committee will hold a hearing on the Tax Cuts and Jobs Act (TCJA) Wednesday. Proponents of the law likely will use the occasion to tout its alleged economic benefits and argue that its temporary provisions should be made permanent. The title of the hearing is “Growing Our Economy and Creating Jobs,” but there is little evidence that the law does either of these things.
No Work Requirements for the Richest 1 Percent — Most of Their Tax Cuts Are for Unearned Income
• By Steve Wamhoff
The Trump Administration is pushing to add or strengthen work requirements for programs that benefit low- and middle-income people but holds a different view when it comes to the wealthy. Most tax cuts enjoyed by the richest 1 percent of households under the recently enacted Tax Cuts and Job Act (TCJA) are tax cuts for unearned income.
New UK Law May Shut Down the Biggest Tax Havens — Aside from the U.S.
• By Steve Wamhoff
The United Kingdom’s parliament has enacted a new law requiring its overseas territories — which include notorious tax havens like Bermuda, the Cayman Islands, and the British Virgin Islands — to start disclosing by 2020 the owners of corporations they register. This could shut down a huge amount of offshore tax evasion and other financial crimes because individuals from anywhere in the world, including the United States. have long been able to set up secret…
Trump Administration’s Spending Priorities Echo Tax Cut Priorities: Punish the Poor and Lavish the Rich
• By ITEP Staff, Jenice R. Robinson, Misha Hill
In 2017, the Trump Administration released a budget proposal filled with loaded language about “welfare reform” and moving able-bodied people from welfare to work. This narrative is designed to perpetuate the pernicious idea that poor people have personal shortcomings and are taking something that rightly belongs to others.
Congressional Budget Office: New Tax Law Helps Foreign Investors Even More than You Thought
• By Steve Wamhoff
President Trump and his allies in Congress have made many wild claims about economic growth that would result from the Tax Cuts and Jobs Act. And the Congressional Budget Office just released a report revealing the TCJA will, in fact, create economic growth — for foreign investors.
The U.S. Is One of the Least Taxed Developed Countries
• By Richard Phillips
The most recent data from the Organization for Economic Cooperation and Development (OECD) show that the United States is one of the least taxed of the developed nations.
New ITEP Report: Extension of the Temporary TCJA Provisions Would Be Just as Regressive as TCJA Itself
• By Steve Wamhoff
A new ITEP report estimates the impacts in every state of the much-discussed idea of extending the temporary provisions in the Tax Cuts and Jobs Act, which will expire after 2025 without further action from Congress. The report concludes that extending or making permanent these provisions would be just as skewed to the wealthy as the original law.
Extensions of the New Tax Law’s Temporary Provisions Would Mainly Benefit the Wealthy
• By Matthew Gardner, Steve Wamhoff
This analysis finds that extending the temporary tax provisions in 2026 would not be aimed at helping the middle-class any more than TCJA as enacted helps the middle-class in 2018.
Passing the Buck: Forcing Spending Cuts through a Balanced Budget Amendment
• By Ronald Mak
House leaders are preparing a vote on a balanced budget amendment next week that could force massive spending cuts and restrict the ability of lawmakers to raise revenue. Although a balanced budget amendment will likely be pitched as a way to address our nation’s long-term fiscal challenges, such proposals are economically harmful, ineffective, and one-sided.
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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