Archive for the ‘Payroll taxes’ Category

Marginal Tax Rates Matter More than Average Tax Rates

Each year when I complete my federal income tax return, Turbotax tells me my average tax rate—how much tax I owe measured as a percentage of my total income. But it would be better if I learned my marginal tax rate or MTR—the percentage tax that I would pay on an additional dollar of income. […]

About the 47 Percent Who Don’t Pay Federal Income Tax: Mitt, Meet Andrea

About that 47 percent: Let me introduce you to Andrea. When I met her a couple of years ago, she was a home health aide who typically worked six days-a-week and often put in 50 hours. She loved her work, but it is not something most of us would want to do. According to the […]

Payroll Taxes Cover About a Third of Medicare Costs

I get the impression that many Americans believe Medicare is financed like Social Security. They know that a portion of payroll taxes goes to Social Security and a portion goes to Medicare. So they conclude workers are paying for Medicare benefits the same way they are paying for Social Security benefits. That isn’t remotely true, […]

A New Urban Institute Calculator Shows What Taxes and Transfers Mean for Low-Income Families

State taxes and transfers can be an important form of assistance for low-income families. But the amount of government help varies widely among the states. And, importantly, so does what happens to those benefits when such a family increases its wages. To help understand how those tax and spending programs work, the Urban Institute has […]

Fixing Medicare’s Double-Counting Problem

Last week I argued that budgeting for Medicare’s hospital insurance program is flawed. Today, I offer two ways to fix it (and reject a third). Medicare Part A is one of several federal programs that control spending through a “belt and suspenders” combination of regular program rules (the belt) and an overall limit (the suspenders). But […]

The Fight Over Medicare Double Counting

The recent double-counting dispute isn’t just about politics; it also reveals a flaw in budgeting for Medicare Part A. Budget experts are waging a spirited battle over the Medicare changes that helped pay for 2010’s health reform. In April, Chuck Blahous, one of two public trustees of the program, released a study arguing that the […]

Why Romney and Obama Pay the Taxes They Pay

By now, many readers of TaxVox know how much Barack Obama and Mitt Romney pay in taxes. But true tax wonks are more interested in why the candidates paid what they paid. A new infographic from the Tax Policy Center tells that story. The interactive display of the president’s and Romney’s (preliminary) 2011 tax returns […]

Budget Gimmicks Are Alive and Well in the Payroll Tax Cut

The other day, I criticized the unwillingness of Congress to finance the latest extension of the payroll tax cut. Since that blog, the Congressional Budget Office released its estimates of the cost of the entire mini-stimulus, including the so-called “doc fix” and changes in unemployment compensation. And the games were even worse than I feared. […]

Just How Big is the Payroll Tax Cut?

The 2-percentage-point payroll tax cut extended by Congress in December and again last week will save workers a total of $114 billion this year, according to the Joint Committee on Taxation. Spread over nearly 160 million workers, that’s an average tax cut of $714. Yet the typical news report says “the average worker earning $50,000 […]

Congress Figures Out How to Finance a Payroll Tax Cut: Borrow the Money

It looks like Congress is about to assume its default position: In the face of an intractable partisan dispute over how to pay for a government initiative, don’t. If Democrats won’t cut spending, and Republicans refuse to raise anybody’s taxes, there is always the solution they both can agree upon—just borrow the money and increase […]