Author Archive

How Does Dave Camp Pay for Individual Tax Cuts? By Raising Revenue from Corporations

Key elements of the tax code rewrite proposed yesterday by House Ways & Means Committee Chair Dave Camp (R-MI) came straight from the playbook of the 1986 Tax Reform Act. The most surprising: As in 1986, it would pay for individual tax cuts by boosting taxes on corporations—at least temporarily. Hard to believe, perhaps, but […]

The Better Base Case

The Congressional Budget Office’s latest update, released today, provides a snapshot of fiscal policy in the short run, the medium term, and the long run. CBO disclosed its short-term analysis in May: If automatic spending cuts and tax increases kick in as scheduled at the end of the year, the U.S. could be thrown back […]

The U.S. Fiscal Imbalance and the Challenge for Tax Policy

Three related issues dominate budget talk in Washington these days: eliminating the deficit, cutting spending, and reforming the tax system. Achieving the first will require accepting painful doses of the second and designing the third so we raise more revenue. No easy tasks there. The difficulty shows clearly in a graph I prepared for a […]

More on Individual Tax Rates and Small Businesses

Howard Gleckman discussed some of the facts and issues regarding the role of small businesses in the debate on the expiring 2001 and 2003 tax cuts. Eric Toder expressed a strange sense of déjà vu. While everyone agrees that changes in the top two marginal tax rates would affect only a small share of individuals who report business income on their tax returns, proponents of full extension point out that those high-income individuals receive a large fraction of net positive business income. (JCT has estimated that fraction at 50 percent; TPC’s estimate is closer to 45 percent.) But what is less well known is what that business income consists of. How much represents the income of the neighborhood grocer or the owner of a small manufacturing firm? And how much represents the income of highly-paid professionals who take their income in the form of partnership shares, such as partners in law firms, accounting firms, and Wall Street hedge funds?