As state legislatures return for what promises to be yet another difficult budget year, they ought to be starting to refill their rainy day funds–those accounts that set aside money for future hard times. That’s a tough decision. After all, for the past three years, states have been raising taxes and cutting spending just to [...]

After much anguish, Congress finally extended this year’s payroll tax cut for two more months. The final bill passed in nearly empty chambers a couple of days before Christmas. But this version differed in an important way from the measure passed by the Senate just a few days earlier. The final bill removed a cap [...]

The fate of The Temporary Payroll Tax Cut Continuation Act of 2011 remains uncertain. But thanks to a carefully crafted technical change to the current payroll tax cut, the Senate version prevents a handful of very high wage earners from potentially enjoying a huge windfall from the two-month tax break. The legislation would cut the [...]

Last December, Congress replaced the two-year-old Making Work Pay tax credit (MWP) with this year’s payroll tax cut. That change cut taxes for higher-income workers, raised taxes for some low-wage workers, and nearly doubled the amount of lost tax revenue. And it most likely provided less bang-for-the-buck economic stimulus than the credit it replaced. Since [...]

Congress is now shadow boxing about the payroll tax holiday that is set to expire at the end of this year. Currently, workers are getting a break equal to 2% of earnings up to the Social Security taxable maximum of $106,800. The temporary tax cut was part of a deal struck last year to extend [...]

It turns out that President Obama’s plan to limit the benefit of itemized deductions is much more than that. Not only would it reduce tax savings for mortgages, charitable gifts, high medical costs, and the like, it would also curb tax breaks for owners of municipal bonds, workers who buy health insurance, and those who earn [...]

When you get right down to it, the jobs plan President Obama proposed before a joint session of Congress last night was built on three elements:  A large payroll tax cut, lots of new spending on public infrastructure, and a promise that its $447 billion cost would be paid for with yet-to-be disclosed tax hikes and [...]

Welcome to the season of jobs plans. GOP presidential hopeful Jon Huntsman offered his last week. President Obama will propose his before Thursday night’s football game.  But today is GOP presidential hopeful Mitt Romney’s day. And at least when it comes to tax policy, he veers a bit to the left of the new Republican orthodoxy.  To be [...]

Given Washington’s endless partisan nastiness—and thanks to some updated estimates by the Congressional Budget Office–it seems like a good time to revisit an old idea: What would happen if Congress and the White House just closed up shop for a couple of years and let fiscal policy run on autopilot? The question is not so [...]

With the U.S. economy spinning its wheels, demands are growing for President Obama to “do something.”  But considering the nature of the slump and the political dynamics in Washington, there may be very little he can do to get the economy out of the ditch. Obama doesn’t make his life any easier when he makes [...]