The stimulus bill before the Senate would exempt from income tax the first $2,400 of unemployment compensation that people receive in 2009. Because the exclusion reduces their taxable income, higher bracket taxpayers get a bigger break than those with lower incomes. And very low-income households that have no tax liability would get no benefit at all.   more »

I am beginning to understand why the stimulus plan is so bloated with stuff that is so obviously not stimulus. It was designed backwards. Congress and President Obama could have identified a list of those proposals that are both timely and targeted, figured out what they would cost, and assembled them into a stimulus measure. Instead, they are doing what Washington always does with big bills such as this: They first invented, out of whole cloth, a number for the size of the stimulus. Having capped the price at a roughly a trillion dollars, they are now horse trading to choose the individual tax cuts and spending to fit that pre-arranged cost target. As my colleague Bill Gale puts it, first they built the bucket, now they are trying to fill it.    more »

Not everyone, it seems, agrees with my assessment of the failure of the Obama Three to properly pay their taxes. I argued that they were among millions of us who got their returns wrong. Others, however, feel they should have known better. From Paul Caron, the esteemed blogger at TaxProf: "These are not rocket-science kinds of tax issues. I take them at their word, but on the other hand, these were not cases of something really esoteric."    more »

The stimulus bill working its way through Congress would make both the child tax credit (CTC) and the earned income tax credit (EITC) available to more low-income workers. The CTC would phase in at lower income levels for the poorest working families, raising after-tax income for the neediest and most likely encouraging them to spend additional income. The EITC would increase for larger families, also giving more cash to families likely to spend quickly.   more »

In the wake of the tax misadventures of Obama nominees Tim Geithner, Tom Daschle, and Nancy Killefer, the question is, “Can’t anyone inside the Beltway get their taxes right?" Sadly, the answer is, “No, they can’t. And neither can the rest of us.”    more »