Federal Tax Policy

Feb 8, 2016

Top 400 Taxpayers See Tax Rates Rise, But There’s More to the Story

As Americans were gathering party supplies to greet the New Year, the Internal Revenue Service released their annual report of cumulative tax data reported on the 400 tax r...

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Feb 4, 2016

Chlorine Bleach Plants Needlessly Endanger 63 Million Americans

Chlorine bleach plants across the U.S. put millions of Americans in danger of a chlorine gas release, a substance so toxic it has been used as a chemical weapon. Greenpeace’s new repo...

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Jan 25, 2016

U.S. Industrial Facilities Reported Fewer Toxic Releases in 2014

The Toxics Release Inventory (TRI) data for 2014 is now available. The good news: total toxic releases by reporting facilities decreased by nearly six percent from 2013 levels. Howe...

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Jan 22, 2016

Methane Causes Climate Change. Here's How the President Plans to Cut Emissions by 40-45 Percent.

UPDATE (Jan. 22, 2016): Today, the Bureau of Land Management (BLM) released its proposed rule to reduce methane emissions...

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Tax Panel Talks Specifics at Yesterday's Meeting

Oct 12, 2005 by Guest Blogger

The President's Advisory Panel on Tax Reform met yesterday in anticipation of their November 1 deadline for submitting tax code recommendations to the Treasury Department. In the meeting the panel referenced some loose conclusions they have come to regarding tax reform, mainly concerning the alternative minimum tax as well as deductions for homeownership and employer-provided health insurance. While the panel still has a few weeks before they will be submitting formal recommendations (which Bush may or may not choose to consider), they have basically come to a consensus that it would be a good idea to cap both the employee income exclusion for employer provided health care as well as the mortgage interest deduction for homeowners. There was discussion of capping employer-provided health insurance at $11,000 per employee, and mortgage interest deduction at $350,000 (for a couple filing jointly). Former GOP Senator and Chairman of the Panel Connie Mack said that the deductions as they currently exist are not shared equally, and that by pursuing caps in both areas it would result in "shifting some of the benefit to middle-income Americans." Much of the reason why the panel is interested in pursuing these reforms is because the decreased deductions would help to offset the cost of repealing the Alternative Minimum Tax (AMT), which was created to ensure that all extremely wealthy individuals would pay some taxes, but is increasingly ensnaring upper- and middle-income Americans. AMT repeal, which would cost about $11.3 trillion over ten years, was deemed to be a necessary reform by the panel months ago, however it was only at yesterday's meeting that they laid out any sort of options to offset to the cost of repeal. At yesterday's meeting the panel also recommended expanding tax breaks for charitable donations, and rejected the idea of replacing the income tax with a sales tax or a value added tax, both of which would unnecessarily complicate the tax code while placing a disproportionate financial burden on low-income families. The panel will meet once more publicly on October 18, and meet later in the month via teleconference before submitting their recommendations. They are slated to disband November 15. New York Times: "Tax Panel Says Popular Breaks Should Be Cut"

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CBO Predicts $317 Billion 2005 Deficit

Oct 7, 2005 by Guest Blogger

Yesterday the Congressional Budget Office revised their deficit estimate for FY 2005, stating that the deficit will be $317 billion. As Sen. Conrad (D-ND) said in a statement on the deficit figure, when the Social Security and other trust fund surpluses also being spent are added in, the debt in 2005 will actually increase by $575 billion. Also, while the cost of the hurricanes will not add a lot to the deficit in 2005, we can expect the 2006 deficit to increase significantly because of disaster-related spending. As the Center on Budget and Policy Priorities points out, while this figure is down from last year, it is largely due to an increase in tax collections from last year. And without the 2003 tax cuts revenues would be higher, and deficits smaller. To read more on the CBO's calculations, see their Monthly Budget Review.

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Budget and Tax Cuts Will Hurt Most Vulnerable

Oct 7, 2005 by Adam Hughes*

Yesterday the Coalition on Human Needs sent a sign-on letter to Congress, requesting that lawmakers focus on addressing human needs issues in the wake of the natural disasters, rather than focus on cutting both entitlement spending and taxes. The letter was endorsed by approximately 750 groups; at least one from every state.

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Tax Reform to Take Spotlight From SS Overhaul

Oct 7, 2005 by Guest Blogger

President Bush recently acknowledged what he called a "diminished appetite" among lawmakers for taking up social security reform. Many are now arguing that attention could swing from addressing social security concerns to addressing tax reform proposals. The President's Advisory Panel on Tax Reform will be submitting their recommendations to the Treasury on November 1, allowing for the Treasury to work the recommendations into proposals that Bush can launch in the January 2006 State of the Union address. The tax panel is supposed to be figuring out how to make the tax code, simpler, fairer, and more pro-growth. The impacts they will actually have though, are still unknown. The tax panel will be holding two meetings this month in Washington, D.C., which are open to the public. On October 11 they will be meeting at 10:00 in the Renaissance Hotel (999 Ninth St., NW) and on October 18 they will be meeting at 9:00 in the Ronald Reagan Building (1300 Pennsylvania Ave).

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Usefulness of Tax Breaks For Katrina Relief Questioned

Oct 6, 2005 by Adam Hughes*

A week after a hearing of the Senate Finance committee cast doubt on the usefulness of tax cuts in relief efforts to help individuals and businesses on the Gulf Coast, additional economists and expert analysts have supported that position. The New York Times reported this morning that economists from the very conservative Heritage Foundation to the more centrist Tax Policy Center have confirmed that President Bush's tax incentive proposal will do less for individuals who live in the affected areas and more for rich investors and businesses from other parts of the country. The Times article quoted William Beach, chief economist at the Heritage Foundation as saying, "People in the area obviously won't have tax liabilities for some time. What we're talking about is getting very wealthy people from around the United States to invest in New Orleans." In addition to growing concensus among private economists that tax cuts are not the best option for relief and reconstruction efforts in the Gulf Coast, the highly respected Congressional Research Service released a report last week that found little evidence of the positive impact of tax incentives such as the "opportunity zones" proposed by President Bush in growth and employment in those areas. Nonetheless, Congress continues to explore writing yet another tax cut bill under the guise of "Katrina relief." Treasury Secretary John Snow was the lead witness today at another Senate Finance Committee hearing to promote the president's tax proposals for reconstruction of the Gulf Coast and spent most of his time defending the proposals against attacks from skeptical Senators.

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GOP Continues to Obsess Over New Tax Cuts

Oct 6, 2005 by Adam Hughes*

Division in Congress appear to be widening over plans to offset emergency spending in the wake of Hurricane Katrina. The House seems intent on instituting an across the board cut to discretionary spending in addition to finding 10 percent more cuts in the reconciliation spending bill this fall, while the Senate has rejected the across the board cut and is focusing on the reconciliation bills and appropriations pork projects. Yet neither chamber is being realistic or genuine in their quest to pay for Katrina spending. Even the most generous estimates of the total cuts Congress could enact to the budget would only pay for approximately 10 to 15 percent of expected Katrina costs. And while the justification for these cuts has been concerns about the deficit, the GOP is insisting on continuing with plans to pass $70 billion in unpaid-for new tax cuts this fall through the reconciliation process. This tax cut bill will actually increase the deficit, despite severe cuts to the budget that will leave Americans less secure, and is conterproductive to other efforts to find offsets for Katrina. If Congress is truly concerned about dealing with the deficit in light of Katrina costs, it needs to address both the spending and revenue side of the equation. There is evidence some Republicans in the Senate are somewhat tuned into this reality, such as Sens. Lincoln Chafee (RI), George Voinovich (OH), and Susan Collins (ME). But it will take a more genuine effort by GOP leaders to revisit the necessity of tax cuts for the most well off in our society in order to change course this fall.

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Medicaid Bill Held Up in Senate

Oct 5, 2005 by Guest Blogger

The White House and many Congressional GOP leaders continue to oppose the Grassley/Baucus Medicaid bill to expand Medicaid eligibility for displaced Hurricane Katrina victims. Sens. Charles Grassley (R-IA) and Max Baucus (D-MT) of the Finance Committee have encountered resistance to their bill from conservatives who object to its cost. However, Grassley noted yesterday that "some of the very same people that are impediments" to the bill will be looking to him for help extending the capital gains tax cut this year. Last friday Sen. John Sununu (R-N.H.) blocked Grassley's attempt to bring the Medicaid bill up for an unanimous consent vote in the Senate. In response, Grassley warned that there might not be a reconciliation bill for spending or tax cuts if key conservatives continue to oppose his Medicaid bill.

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Bush and GOP Leaders Call for More Budget Cuts

Oct 5, 2005 by Guest Blogger

In a news conference yesterday, President Bush put pressure on Congress to pay for as much of the hurricane relief as possible by cutting spending. He urged that funding be cut in both non-defense discretionary spending and entitlement spending. His comments prompted House Budget Committee Chairman Jim Nussle (R-IA) to claim that he will seek even more cuts in entitlement expenditures than those laid out in April's budget resolution. Currently the resolution instructs that entitlement spending be cut by $35 million over the next five years. Nussle said in an interview that Gulf Coast reconstruction costs should be partly offset through across-the-board reductions in discretionary spending, beginning with a 2 percent "haircut" from the $843 billion agreed to under the FY06 budget." The Coalition on Human Needs has an analysis highlighting how those cuts will affect human needs programs. One has to wonder where these gestures of fiscal responsibility were when Congress passed trillions of dollars worth of tax cuts in 2001 and 2003, which were not offset by any spending cuts. That Congress also wants to push ahead with extending reduced rates for capital gains and dividends taxes -- tax breaks which benefit primarily the wealthy -- further serves to illustrate that these spending cuts could be avoided. Bush also asserted yesterday that even though Congress has a "diminished appetite" for overhauling Social Security, he has not taken the issue off the table. Bush said, "Social Security for me is never off. It's a long-term problem that's going to need to be addressed." However, the solutions he claimed to support a few months ago would lower guarenteed benefits and cost $700 billion over the next decade. Not exactly a great way to cut down federal spending.

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Committee for Econ. Development Releases Tax Plan

Sep 30, 2005 by Adam Hughes*

The Committee for Economic Development released a comprehensive tax reform proposal entitled A New Tax Framework: A Blueprint for Averting a Fiscal Crises this past Tuesday at the National Press Club in Washington, DC. The CED proposal calls for a new hybrid federal tax system featuring a phased-in 10 percent Value-Added Tax (VAT) to supplement a reformed and streamlined federal income tax. Notably, the report recommends the retention of the estate tax at the 2009 levels under current law ($3.5 million exemption and 45 percent marginal tax rate). Read the Report: Press Release (.pdf) Executive Summary (.pdf) Full Report (.pdf)

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Disaster Reconstruction: How Effective Are Tax Breaks?

Sep 30, 2005 by Adam Hughes*

On September 28 the Senate Finance Committee held a hearing looking at various tax incentives and how they will assist in Gulf Coast reconstruction operations. Governors Blanco of Louisiana, Barbour of Mississippi, and Riley of Alabama testified, and while they did not agree on preferred tax incentives, they all requested some form of tax benefits ranging from zeroing out capital gains taxes on investments to accelerated depreciation to various bond programs. Other witnesses, however, questioned the use of tax cuts as an effective method of providing post-disaster relief.

Daniel Doctoroff, the Deputy Mayor for Economic Development and Rebuilding for New York City who helped direct post-9/11 operations, told the Committee that in his experience tax provisions were a cumbersome method for delivering disaster assistance. He argued that benefits are provided only if businesses and economic growth respond to predicted forecasts, and mentioned that Congressional appropriations were a much better way of addressing relief and rebuilding needs.
George Yin, Chief of Staff for the Joint Committee on Taxation, also voiced skepticism regarding the effectiveness of tax incentives. He testified that tax breaks are particularly ineffective when addressing the needs of low-income earners, particularly because would-be beneficiaries are not aware of many of the tax provisions or how to obtain them. Also, low-income earners stand to receive less in tax benefits overall because they have less-taxable income.

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