Did bad tax policy help cause the economic meltdown? Former assistant Treasury Secretary for Tax Policy Pam Olson thinks so.
Speaking at a Dec. 5 tax reform conference sponsored by TPC and Tax Analysts, Pam fingered what she called an “anti-equity and pro-leverage” Internal Revenue Code as one culprit in the collapsing credit markets. TPC’s Bill Gale agrees–after a fashion–although other tax experts are unconvinced.

The federal budget deficit has worsened over the past year as the economy collapsed into recession, Congress once again patched the alternative minimum tax (AMT), and the Treasury took steps to stabilize credit markets and rejuvenate the economy. Red ink drenches the federal budget for the foreseeable future.

Just as demand for both alternative energy and low-income housing is growing, is the market drying up for the tax credits that drive much of the investment in both?
Evidence is that the answer is “yes.” The culprits: the crumbling economy, paralyzed bond markets, and the government itself. This may be yet another example of the always-deadly law of unintended consequences.

The headlines today say Chrysler has asked Congress for a bridge loan of $7 billion on top of the $8.5 billion it already requested to subsidize development of fuel efficient cars. But it is not exactly Chrysler that is asking for the money. Rather it is its majority shareholder: the private equity firm Cerberus Capital Management. Thus I cannot help but wonder whether the true beneficiaries of this transaction will be Cerberus and its partners rather than Chrysler’s workers, suppliers, and dealers.

I just finished moderating an Urban Institute panel discussion featuring three confirmed deficit hawks—former CBO directors Bob Reischauer and Rudy Penner, and TPC’s Len Burman. The question on the table: What will the now-official recession and the federal government’s massive deficits mean for Barack Obama’s hugely ambitious domestic agenda?

Before you head out for Black Friday shopping, take note of what can happen with a European-style Value-Added Tax run amok, courtesy of our friends at TaxProf.
In a paper presented Nov. 18 at the University of Connecticut Tax Lecture Series, Oxford University's Rita de la Feria described the amusing but instructive case of Jaffa Cakes. If these confections were indeed cake, they would be treated as food and thus exempt from the VAT. If, however, they were cookies, they would be subject to the full 17.5 percent rate.

Barack Obama has set quite a goal for himself: He wants a fiscal stimulus that will both boost today's economy and lay the groundwork for “long-term sustained… growth.”
Doing both will not be easy. In fact, it may not be possible. So which is more important?

It seems paradoxical, but some well-connected health reformers are arguing that a costly remake of U.S. insurance may be more likely in the wake of the economic slump. Their theory: Since we are already spending hundreds of billions to bail out the financial system and since the Obama Administration is likely to pump out a similar amount in fiscal stimulus early next year, the time may be right to spend a few hundred billion more on health coverage for the uninsured.

Last night, at one of those ubiquitous Washington cocktail receptions, I ran into an old friend who, for more than two decades, has been a policy analyst at a federal agency. Her hair-raising story, familiar to many inside the Beltway, is worth retelling as a new president prepares to take office.
My friend runs a modest research shop within the bowels of a huge agency. Her job, to oversimplify a bit, is to take a hard look at billions of dollars of federal programs to determine what works and what doesn't.

The debate over bailing out the auto industry is producing a veritable fleet of Pinto-like policy prescriptions. And they get worse by the day.
First, an aide to Barack Obama hints the President-elect is considering an auto czar who'd have the authority to force the industry to retool in return for billions in taxpayer assistance. The Russian image is a good start, but the czar thing may be historically premature. Maybe better to call him the Commissar of Cars.