Posts Tagged ‘tax policy’

Cheeps and Chirps for Oct. 31, 2018

October 31, 2018

By Matthew E. Milliken
MEMwrites.wordpress.com
Oct. 31, 2018

 

Chirping from the hip.

• Politics, Supreme Court edition

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Cheeps and Chirps — belated July 2016 Republican National Convention edition!

August 11, 2016

By Matthew E. Milliken
MEMwrites.wordpress.com
Aug. 11, 2016

Twitter feed, represent!

Sadly, this could be an evergreen tweet

 

• Reminder: The U.S. is still at war

 

• Comedy!

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Dynamic scoring, sobering results: More on the Tax Foundation’s analysis of GOP candidates’ tax plans

November 14, 2015

By Matthew E. Milliken
MEMwrites.wordpress.com
Nov. 14, 2015

Recently, I performed some sophisticated data crunching on a Tax Foundation analysis of the tax-reform plans of seven Republican presidential candidates. (Which is to say, I typed the data from this Tax Foundation table into a spreadsheet and divided certain numbers by 10.) After comparing the results to historic U.S. budget deficits, I concluded that:

[A]ll of these tax proposals would be budget busters, creating some of the largest annual deficits in U.S. history. If enacted, and if they worked as projected, either government services would have to be cut dramatically or tax rates would have to be increased in order to prevent the national debt from ballooning. And given the political scene, the former option would be far more likely to be enacted.

However, there’s a catch.

The catch is that the Tax Foundation projected potential budget surpluses or deficits for the Republican proposals using two different methods. The numbers I relayed in my previous post were produced using static revenue estimates, a technique that has long been employed by government budget analysts.

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U.S. budget deficits: Numbers past, present and future

November 12, 2015

By Matthew E. Milliken
MEMwrites.wordpress.com
Nov. 12, 2015

Earlier this week, I wrote about an analysis from the Tax Foundation that indicated that the tax-reform plans of seven Republican candidates each might increase the deficit by more than a trillion of dollars over a 10-year period. I want to explore the details a little further.

Allow me to set the stage with a brief history of federal budget deficits. The first time the U.S. budget was in the red for more than $75 billion was in fiscal year 1981, when it hit $79 billion under a plan enacted in what turned out to be the last year of Jimmy Carter’s presidency. The first time the federal deficit exceeded $100 billion was the very next year, under Ronald Reagan, when it reached $128 billion. Between 1983 and 1995, the budgetary gap ranged from a low of roughly $150 billion to a high of $290 billion.

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Deficits as far as the eye can see: An overview of the Republican presidential candidates’ tax plans

November 11, 2015

By Matthew E. Milliken
MEMwrites.wordpress.com
Nov. 11, 2015

Last month, I examined a common theme in the tax reform plans of seemingly every Republican presidential candidate: The notion that, as Donald Trump’s tax plan states, massive tax cuts for the rich can be “fully paid for by…[r]educing or eliminating most deductions and loopholes available to the very rich.”

I criticized this idea on the grounds that removing a wide swath of deductions and loopholes (part of a budget category that policy wonks call “tax expenditures”) is extremely difficult to do. Some of these expenditures, such as the mortgage-interest deduction for home purchasers, are widely popular, even though they do little to promote their intended policy goals. And some of these expenditures have the backing of interest groups that routinely spend hundreds of millions of dollars annually on lobbying, political contributions and the like.

My fear is that our next Republican president might (read: would) prioritize implementing their program of tax-rate reductions over enacting the reduction and reform of tax expenditures. That, of course, would produce a fundamentally untenable budget situation, one where the revenue loss from tax cuts would not be zeroed out by voiding tax expenditures. In this scenario, the United States would face a significant built-in annual deficit.

The ultimate result, of course, would almost certainly be radical cutbacks in government services — unless Congress and the president agreed to hike tax rates substantially. But that’s hard to do even when the two major political parties don’t have ideological differences as deep as they’ve become in the early 21st century.

I stand by what I wrote. However, I must confess that my earlier post ignored the real issue.

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On tax expenditures: Some additional details and a renewed caveat

October 16, 2015

By Matthew E. Milliken
MEMwrites.wordpress.com
Oct. 16, 2015

Author’s note: Things have been a bit disjointed this week — apologies for my erratic posting! MEM

I wanted to follow up on last week’s post about tax deductions with some additional information on the subject.

What is a tax deduction? Actually, the correct term for the concept I discussed in the previous post is tax expenditure, which can take multiple forms. Expenditures encompass deductions, exclusions, and tax credits, which can be either refundable or non-refundable. The Tax Policy Center, a group created by the Urban Institute and the Brookings Institution, has more information in this 2009 briefing.

The Government Accountability Office lists six different types of tax expenditures: exclusions, exemptions, deductions, credits, preferential tax rates and deferrals. (See figure 4 at the bottom of this page.)

• How much do tax expenditures cost the government on an annual basis? The numbers vary from year to year, but in 2014, all tax expenditures cost the U.S. government an estimated $1.4 trillion, according to a 2014 post from the Bipartisan Policy Center which drew on congressional sources.

• How does that compare with other major items in the federal budget? In 2014, according to the Government Accountability Office, the federal government’s $1.4 trillion in tax expenditures was about the same as the overall amount of federal discretionary spending. Mandatory spending is significantly larger than either category — more than $2 trillion in 2014 — and has been for the past quarter-century. (See figure 2 on the previously cited G.A.O. page.)

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Tax deductions and magical thinking: When smart policy makes for unpopular politics

October 10, 2015

By Matthew E. Milliken
MEMwrites.wordpress.com
Oct. 10, 2015

Republican tax plans all seem to have something in common — something besides lowering the top individual and corporate income-tax rates, that is. See if you can spot it.

Real estate mogul and reality TV host Donald Trump’s tax plan aims to lower taxes and to simplify the tax code. Trump’s proposal claims that its “tax cuts are fully paid for by:”

1. Reducing or eliminating most deductions and loopholes available to the very rich.…

3. Reducing or eliminating corporate loopholes that cater to special interests, as well as deductions made unnecessary or redundant by the new lower tax rate on corporations and business income…

Former Florida Gov. Jeb Bush’s tax proposal would:

• Simplify the tax code for all Americans to lessen the power of the IRS and increase both prosperity and fairness.

• Reduce loopholes and special tax provisions created by lobbyists that invariably benefit those at the top.

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