More About Chuck Marr

Chuck Marr

Chuck Marr is the Director of Federal Tax Policy at the Center on Budget and Policy Priorities.

Full bio and recent public appearances | Research archive at CBPP.org


House GOP Follows Ryan Anti-Poverty Plan With Pro-Poverty Legislation

July 25, 2014 at 11:12 am

House Budget Committee Chairman Paul Ryan (R-WI) extolled the anti-poverty effects of the Earned Income Tax Credit (EITC) and, in his new poverty proposal, wisely proposed expanding it for childless adults (including non-custodial parents).  The praise that Chairman Ryan correctly gave the EITC also applies to the refundable portion of the Child Tax Credit (CTC).  Both of these essential tax credits encourage work, expand opportunity, and reduce poverty.

Today, however, House Republicans are considering on the House floor permanent CTC legislation — a bill for which Rep. Ryan voted as a Ways and Means Committee member — that would lead to more poverty, not less.  The bill permanently alters the CTC by extending it higher up the income scale so that more families with six-figure incomes can benefit from it, while failing to make permanent a key CTC improvement from 2009 for working-poor and near-poor families that’s slated to expire at the end of 2017.  Census data show that letting the CTC improvement for low-income working families expire after 2017 would push 12 million people — including 6 million children — into or deeper into poverty (see chart).

As we have explained, the House bill raises the income levels at which the CTC begins to phase out and indexes those thresholds to inflation.  Couples with two children making between $150,000 and $205,000 would become newly eligible for the credit; a family making $160,000, for example, would receive a new tax cut of $2,200 in 2018.  But because the bill fails to make permanent the 2009 reduction in the CTC’s earnings threshold after 2017, a single mother with two children who works full time throughout the year at the minimum wage and earns $14,500 would lose her entire CTC of $1,725 in 2018.

The bill also indexes the current maximum credit of $1,000 per child to inflation, but that would not help most working families with low or moderate incomes because it benefits only those with incomes high enough to receive the maximum credit.  If the credit’s $3,000 earnings threshold (the level of family earnings at which the credit starts to phase in) is allowed to expire at the end of 2017, the threshold will nearly quintuple — and families making less than about $14,500 will lose their CTC altogether.  In addition, many working families with incomes somewhat above $14,500 will have their CTC cut substantially and no longer receive the maximum credit, making the inflation adjustment meaningless for them.  Under the House bill, indexing would not benefit a family with two children in 2018 until the family has earnings of at least $28,050 — nearly double full-time work at the minimum wage.

Chairman Ryan’s colleagues should consider the poverty-fighting effects of tax credits such as the CTC for low-income working families.  Then they should reverse course and put these families’ needs first, rather than last.

Ryan Adds Momentum to Expanding EITC for Childless Workers

July 24, 2014 at 4:56 pm

House Budget Committee Chairman Paul Ryan highlighted the Earned Income Tax Credit (EITC) today as one of the most effective anti-poverty programs and joined growing bipartisan calls to expand it for childless adults (including non-custodial parents), the lone group that the federal tax system taxes into poverty.  We applaud this step, though we encourage him to reconsider some of his proposals to offset the cost — which would hit vulnerable families — and his opposition to a much-needed increase in the minimum wage.

Ryan proposes lowering the eligibility age for the EITC for workers not raising minor children from 25 to 21, doubling the maximum credit to about $1,000, and phasing in the credit more quickly as a worker’s income rises.

Ryan’s poverty proposal makes a strong, and broadly shared, case for these changes:

  • It notes that young adults’ labor force participation has dropped precipitously in recent years and their unemployment rate is very high.  “[T]he sooner young adults join the workforce, the more experience they will gain and the stronger their attachment will be,” it points out.
  • It cites the findings by the University of Wisconsin’s John Karl Scholz, one of the country’s top EITC experts, that strengthening the EITC for childless workers could lower unemployment, promote marriage, and reduce incarceration rates.  (See our report for more on these issues.) 

President Obama has proposed a very similar EITC expansion, and Senator Marco Rubio (R-FL) has highlighted the need to increase wage subsidies for childless workers.  Congressional Democrats have also championed substantial improvements to the EITC for childless workers.

Unfortunately, Ryan’s proposal has two serious flaws.

First, he would pay for it in part by eliminating the refundable part of the Child Tax Credit for several million children in low-income immigrant working families, including citizen children and “Dreamers,” thereby pushing many of them into — or deeper into — poverty. He would also eliminate the Social Services Block Grant, a flexible funding source that helps states meet the specialized needs of their most vulnerable populations, primarily low- and moderate-income children and people who are elderly or disabled.  (This program provides the kind of services and state flexibility that Ryan says we need more of when he promotes other parts of his plan that would enable states to cut food stamps and rental assistance and shift the resources to services.)

Also among the programs that Ryan would end is one that provides fresh fruits and vegetables primarily to children in schools in low-income areas.  By contrast, the President would pay for his EITC expansion by closing tax loopholes for wealthy taxpayers.

Second, Ryan presents the proposal as an alternative to raising the minimum wage, which has lost 22 percent of its value since the late 1960s due to inflation.  As we have explained, it takes both a strong EITC and an adequate minimum wage to ensure that work “pays” adequately for those in low-wage jobs.  The two policies should be seen as complements, not substitutes.

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House Should Reject Backwards Child Tax Credit Bill

July 18, 2014 at 2:11 pm

The full House next week will consider the Ways and Means Committee’s recently passed Child Tax Credit (CTC) bill.  A recent Tax Policy Center (TPC) analysis confirms our previous critical assessments of the proposal, finding that it would make many relatively affluent people better off while making low-income working families poorer.

As we explained, the bill makes three main policy decisions that, taken together, constitute poor policy:

  1. It extends the Child Tax Credit higher up the income scale — on a permanent basis — so more families with six-figure incomes will benefit.  The bill raises the income levels at which the CTC begins to phase out.  (It also indexes those thresholds to inflation.)  Couples with two children making between $150,000 and $205,000 would become newly eligible for the credit; a family making $150,000 a year would receive a new tax cut of $2,200 in 2018. 
  2. It fails to make permanent a key CTC provision for working-poor families that will expire in 2017 unless Congress acts.  The provision, which was enacted in 2009, made more working-poor families eligible for the CTC and enlarged it for other working-poor families who had been receiving only a partial credit, by phasing in the credit as a family’s earnings rose above $3,000.  If this low-income provision expires on schedule — as the Ways and Means bill allows — a single mother with two children who works full time throughout the year at the minimum wage and earns $14,500 would lose $1,725 in 2018, as her CTC would be eliminated. 
  3. It indexes the current maximum credit of $1,000 per child to inflation.  This provision benefits only those with incomes high enough to receive the maximum credit.  If the low-income provision is allowed to expire in 2017, millions of working-poor families would either lose their CTC altogether or have their CTC cut and no longer receive the maximum credit, which would make the inflation adjustment meaningless for them.  Under the bill, indexing wouldn’t benefit a family with two children in 2018 until it has earnings of at least $28,050 — nearly double what full-time minimum-wage work pays an individual, as we have explained. 

TPC’s analysis illustrates how the combined effects of these policy decisions harm low-income families while benefiting many with higher incomes.  As the first chart below shows, families with children that have incomes between $100,000 and $200,000 would gain, on average, nearly $550 apiece in 2018, while families with incomes below $40,000 would lose, on average.

The Ways and Means bill’s effects on households’ after-tax incomes are also striking.  As the next chart below shows, households earning less than $20,000 in 2018 would face, on average, a drop in their after-tax income of more than 3 percent while those with incomes between $100,000 and $200,000 would get a boost in their after-tax earnings.

TPC’s analysis underscores the downsides of the Ways and Means bill for low-income working families.  These are parents who work for low or modest wages as cashiers, waitresses, home health aides, and day laborers; they clean office buildings or perform other low-paid work.  Policymakers should reverse course and put these families’ needs first, rather than last, when the full House considers the bill.

Chairman Camp’s Troubling Stand on Tax Compliance

July 18, 2014 at 9:00 am

The House voted this week to wipe out one quarter of the Internal Revenue Service’s (IRS) enforcement budget.  This cut, which would dramatically worsen the hit that the IRS budget has taken since 2010, will further undermine the IRS’s ability to collect taxes that are owed. As we’ve described, this helps tax evaders and hurts honest taxpayers, and ultimately increases the deficit.

A less-noticed attack on tax compliance came last week from House Ways and Means Committee Chairman Dave Camp (R-MI), who characterized as tax increases — and therefore unacceptable — provisions in the Senate highway funding bill that are designed to better enable the IRS to enforce tax laws already on the books.

In a press release, Chairman Camp said:

I do not support, and the House will not support, billions of dollars in higher taxes to pay for more spending.  And, I certainly do not support permanent tax increases to pay for just 10 months of highway programs.  Furthermore, it is inconceivable that the House would, as the Senate proposes to do, grant the IRS additional authority to audit and investigate taxpayers simply so Washington can spend more money.

The so-called “permanent tax increases” that Camp condemned include ensuring adequate disclosure of mortgage transactions and clarifying what constitutes a “substantial omission of income” on a tax return.  They are tax compliance provisions, meant to enable the IRS to collect the revenues that taxpayers owe.

As Senate Finance Committee Chairman Ron Wyden (D-OR) told Politico, “these are taxes owed” and “this is enforcing existing law.”  Underscoring the bipartisan nature of this interpretation of the Senate bill, Sen. John Thune (R-SD) added “those are taxes that are owed, and to me, that’s simply a function of making sure that we’re getting paid.”

Camp’s attack was particularly stunning, coming from the chairman of the very committee that writes the nation’s tax laws.  He deemed it “inconceivable” that the House would give the IRS the ability to enforce the tax laws — one of its core functions.  In fact, it should be inconceivable that Congress does not routinely make modest technical adjustments to ensure that people pay taxes as the law intends.  Honest taxpayers deserve no less.

Camp’s position, coupled with the House action to slash the IRS enforcement budget, reflect a fundamental shift in the tax debate, from policymakers supporting appropriate enforcement of the nation’s tax laws to actively seeking to undermine what should be bipartisan compliance efforts.

Finally, Signs of Momentum on Corporate Inversions

July 17, 2014 at 4:26 pm

First it was Pfizer.  Now it’s Walgreens.  These and a growing list of companies have made headlines as they consider shifting their headquarters overseas — so-called corporate “inversions” — so they can avoid paying taxes on past and future profits.  In reality, these companies are not going anywhere.  They will still rely on U.S. infrastructure and scientific research and our educated workforce.  They just don’t want to help pay for it.

These headlines beg for a swift policy response.  Reps. Sander Levin (D-MI), the top Democrat on the House Ways and Means Committee, and Chris Van Hollen (D-MD), the top Democrat on the House Budget Committee, have advanced a House proposal that would make it harder for U.S. companies to expatriate to avoid U.S tax and, consequently, save $19.5 billion over ten years.

There are now fresh signs of momentum as key players hint that they want to try to act quickly.  Specifically, Treasury Secretary Jacob Lew, in a letter to Senate Finance Committee Chairman Ron Wyden (D-OR), called for a “new sense of economic patriotism” and said “we should not be providing support for corporations that seek to shift their profits overseas to avoid paying their fair share of taxes.”  He called on Chairman Wyden to pursue anti-inversion legislation.  Chairman Wyden quickly signaled support for near-term action, as did Senate Majority Leader Harry Reid (D-NV).

Secretary Lew’s call for a new patriotism isn’t new.  In 2004, Congress took swift bipartisan action in response to a spate of corporate inversions. Then-Finance Committee Chairman Chuck Grassley (R-IA) and his committee issued a press release describing Congress’ legislative action:

‘This will hit the unpatriotic companies that dash and stash their cash,’ Grassley said. . . .

‘I still remember my disgust when I watched a video of an accounting firm partner hawking corporate expatriation as a ‘mega trend hot topic’ because of depressed stock prices [after the events of September 11, 2001],’ Grassley said. 

As the current uptick in inversions shows, corporate tax lawyers have found ways around the 2004 anti-inversion provisions.  Policymakers should approve legislation that strengthens the bipartisan response from a decade ago — and soon.  Waiting for corporate or international tax reform will only invite more tax avoidance-driven corporate exits.