During the Great Recession, the most ambitious state revenue-raising efforts closed just 10 percent of shortfalls and most states relied heavily on federal aid and budget cuts to balance their budgets. Of course, states can and should turn to progressive revenue-raising options now, but as the pandemic rages on, the extent of this crisis will become too significant for states and localities to handle on their own. The federal government should step in to help.
COVID-19
Lawmakers continue to examine how to respond to the continually evolving economic crisis, precipitated by COVID-19. ITEP’s unique contribution to the policy debate is its rapid analyses of economic stimulus and relief plans. Decisions made now will have short- and long-term implications for families, communities and state and local governments. We are committed to providing distributional analyses of how all proposals affect people across the income spectrum. When possible, we also will provide analyses for all 50 states.
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blog July 31, 2020 Sorry, States: GOP Senate Ignores Need for Federal Relief to State and Local Governments
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brief July 29, 2020 Sales Tax Holidays: An Ineffective Alternative to Real Sales Tax Reform
Lawmakers in many states have enacted “sales tax holidays” (16 states will hold them in 2020) to provide a temporary break on paying the tax on purchases of clothing, school supplies, and other items. These holidays may seem to lessen the regressive impacts of the sales tax, but their benefits are minimal while their downsides are significant—and amplified in the context of the COVID-19 pandemic. This policy brief looks at sales tax holidays as a tax reduction device.
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blog July 29, 2020 A Cautionary Tale on Sales Tax Holidays During a Pandemic
Sixteen U.S. states will hold “sales tax holidays” this year. As ITEP’s newly updated brief explains, these events offer dubious benefits at significant public expense even in normal years, problems which are only amplified in the context of the COVID-19 pandemic.
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blog July 28, 2020 A Hero vs a Heel: No Contest
Americans are demanding policy that meets the needs of this urgent moment. There are now competing proposals from the U.S. House and Senate: One is a reasonable response to the staggering crisis we’re in. One is not.
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brief July 28, 2020 New Analysis Compares HEROES Act and HEALS Act, Disaggregates Data by Race and Income
The Health, Economic Assistance, Liability Protection and Schools (HEALS) Act released by Senate Republicans Monday includes a tax rebate that is slightly more generous than the one provided under the March CARES Act, but fails to correct most of the earlier act’s problems. House Democrats addressed these shortcomings in the May HEROES Act, a better starting place for negotiations over the next round of COVID-19 relief. ITEP has analyzed both acts to provide a detailed comparison of how the tax rebate provisions would affect families across the income spectrum and by race. Both measures would provide cash payments to a majority of individuals and families, but the HEROES Act goes farther and is more inclusive.
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blog July 24, 2020 Treasury Secretary Mnuchin to Unemployed Workers: Don’t Worry, Get a Bank Loan
In an explanation that can only be called richsplaining, Treasury Secretary Steve Mnuchin on Thursday suggested that Congress’s delay in approving expanded unemployment benefits was no problem because banks would extend loans to people in the meantime.
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news release July 23, 2020 Republican COVID Relief Plan Doesn’t Rise to the Moment
Media contact Following is a statement by Amy Hanauer, executive director of the Institute on Taxation and Economic Policy (ITEP), regarding the pending Republican plan for phase IV COVID-19 relief.… -
blog July 21, 2020 New ITEP Report on Trump’s Payroll Tax Holiday
While the White House hasn’t clarified what it is proposing, we know that a payroll tax cut would not be well-targeted. In a new report, ITEP estimates the effects of suspending Social Security and Medicare payroll taxes for employees and employers from September 1 through the end of the year. We find that 64 percent of the benefits would go to the richest 20 percent of Americans while 24 percent of the benefits would go to the richest 1 percent.
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report July 21, 2020 An Updated Analysis of a Potential Payroll Tax Holiday
ITEP estimates that if Congress and the president eliminated all Social Security and Medicare payroll taxes paid by employers and employees from Sept. 1 through the end of the year, 64 percent of the benefits would go the richest 20 percent of taxpayers and 24 percent of the benefits would go to the richest 1 percent of taxpayers, as illustrated in the table below. The total cost of this hypothetical proposal would be $336 billion.
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blog July 17, 2020 SALT Cap Repeal Has No Place in COVID-19 Legislation: National and State-by-State Data
The Trump-GOP tax law enacted at the end of 2017 includes a $10,000 cap on the amount of state and local taxes (SALT) that people can deduct on their federal tax returns, and this is one of the few limits the law places on tax breaks for high-income people. Unfortunately, it is also the provision that some Democrats are most determined to remove.
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blog July 1, 2020 New Fiscal Year Brings New Challenges and Opportunities in the States
July 1—the start of the new fiscal year in most states—typically marks a point when one can take a step back and reflect on the wins and disappointments of the past state legislative sessions. 2020 is markedly different. Nationwide business closures and stay-at-home orders in response to COVID-19 have led to unprecedented spikes in unemployment, decreased demand for consumer spending, and increased demand for vital public services. As a result, states face incredibly uncertain financial futures with little clarity regarding how their tax collections will fare over the next year.
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blog June 23, 2020 McSally “Travel Tax Credit” Is an Invitation for Tax Avoidance
Earlier this week, U.S. Sen. Martha McSally (R-AZ) introduced the “American TRIP Act,” a bill ostensibly designed to encourage Americans to boost the economy by traveling within the United States. The bill is certainly a trip in the colloquial sense of the word.
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blog June 2, 2020 White House Incredibly Still Believes Tax Cuts Are the Answer to America’s Problems
White House officials continue to discuss tax cuts in response to the COVID-19 pandemic. Steve Wamhoff provides a roundup of these terrible ideas that would do little to boost investment or reach those who need it most.
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report June 2, 2020 Depreciation Breaks Have Saved 20 Major Corporations $26.5 Billion Over Past Two Years
The Trump administration and its congressional allies have proposed making permanent the expensing provision in the Trump-GOP tax law. Expensing is the most extreme form of accelerated depreciation, which allows businesses to deduct the cost of purchasing equipment more quickly than it wears out. But expensing and other types of accelerated depreciation already account for a very large share of corporate tax breaks and allows many companies to pay nothing at all.
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blog May 28, 2020 Trump Administration Stops Pretending to Care About the Economy with Its Capital Gains Tax Proposal
Proponents of capital gains tax breaks have always offered a weak argument that they encourage investment and thereby grow the economy. But the Trump administration is now floating a temporary capital gains tax break, which is supported by no argument at all. It would only reward investments made in the past while doing nothing to encourage new investment.
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blog May 20, 2020 The HEROES Act Would Correct CARES Act Business Tax Mistakes
The Health Economic Recovery and Omnibus Emergency Solutions (HEROES) Act includes important changes to business tax provisions in the CARES Act, the most recent COVID-19 legislation enacted by Congress and… -
report May 15, 2020 Major Cash Payment and Tax Provisions in the HEROES Act
The major provisions for cash payments and tax changes in the House Democrats’ Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act would provide nearly $600 billion to individuals and households and average benefits of more than $3,000 to families in all but the highest income levels.
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brief May 14, 2020 Analysis: How the HEROES Act Would Reach ITIN Filers
The HEROES Act, filed by the House Democrats this week, includes a new one-time payment of $1,200 per adult and child and extends the payment to ITIN filers and their families. The bill also includes a retroactive change to the CARES Act ensuring ITIN filers will also receive the initial payment under the CARES Act. ITEP estimates more than 4.3 million adults and 3.5 million children would benefit from this change.
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ITEP Work in Action May 14, 2020 Fiscal Policy Institute: Unemployment Insurance Taxes Paid for Undocumented Workers in NYS
In the midst of a pandemic, there has been a growing call for undocumented immigrants, who make up five percent of the New York State labor force, to be covered… -
blog May 12, 2020 HEROES Act is an Appropriate Recession Response
House Democrats today introduced a proposal that responds to our staggering economic crisis with the right policies at the necessary scale. It’s a refreshing change from some of the misdirected ideas that have passed or been floated in these alarming economic times.
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blog May 8, 2020 Which Workers Wouldn’t Be Helped by a Payroll Tax Cut?
New data released today estimates 20.5 million jobs were lost in the month of April alone. Workers not currently receiving paychecks would be left out of any benefits provided by a payroll tax cut.
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news release May 6, 2020 ITEP: White House Seeks to Exploit COVID-19 Crisis to Enact Unpopular Tax Cuts
Following is a statement by Amy Hanauer, executive director of the Institute on Taxation and Economic Policy, regarding the Trump administration’s musings to respond to the COVID-19 health and economic crisis with tax cuts.
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blog May 6, 2020 Trump’s Latest Tax Break Proposals Include Everything—Except Helping Regular People
None of the tax proposals considered by the administration would provide help to those who need it or do much, if anything, to boost investment.
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blog May 5, 2020 Trump’s Payroll Tax Cut Makes Even Less Sense as Job Losses Mount
Last August, long before COVID-19 ravaged the U.S. economy, the Trump Administration began touting a payroll tax cut as a stimulus. Now, with more than 30 million official unemployment claims… -
blog May 4, 2020 Intended Consequences: Deliberate Disinvestment Caused Florida’s Unemployment Disaster
Florida politicians deliberately rigged the unemployment system after the Great Recession to avoid raising taxes on businesses. Now, in a pandemic, some out-of-work residents are left waiting more than six weeks for unemployment benefits while more than 280,000 others have been inexplicably denied. What’s happening in Florida underscores deeper challenges with systems that should help those in need, but instead are designed to fail them.