Obama’s Education Tax Proposals Would Help Middle-Class Families, Not Hurt Them as Opponents Inaccurately Claim

January 22, 2015 at 5:29 pm

Some critics claim that President Obama’s proposal to streamline and better target tax credits for higher education represents an attack on middle-class families, particularly because of the limits it would impose on so-called “529” accounts.  That’s backward:  the plan overall would do more to help both middle-class and lower-income families afford college.

The President’s plan would scale back tax benefits that disproportionately benefit high-income filers and redirect them toward low- and middle-income students — the people who most need help affording college.  … Read more

FAQs on Budget “Reconciliation”

January 22, 2015 at 2:59 pm

Republican leaders plan to use a legislative process called “reconciliation,” which allows for special and speedy congressional consideration of certain tax and spending bills, to advance their fiscal policy agenda in 2015.  In the Senate, members can’t filibuster reconciliation bills, and the scope of amendments they can offer to them is limited, giving this process real advantages for enacting controversial budget and tax measures.  Our new report addresses some frequently asked questions about reconciliation:

  • How Often Have Policymakers Used Reconciliation?
  • What Kinds of Changes Can a Reconciliation Bill Include?
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Medicaid Eligibility for Low-Income Adults Lags Badly in Non-Expansion States

January 22, 2015 at 12:51 pm

The 23 states that haven’t expanded Medicaid as part of health reform have very limited Medicaid eligibility for non-elderly low-income adults, the latest annual survey of state health program officials from Georgetown University’s Center for Children and Families and the Kaiser Family Foundation finds.  That’s a key reason why 4 million uninsured adults remain in a “coverage gap” in non-expansion states, with incomes too high for Medicaid but loo low for subsidies to buy coverage through health reform’s marketplace.

By and large, non-expansion states have kept Medicaid eligibility for low-income adults at the very low income levels in place before health reform took effect. … Read more

Working-Family Tax Credit Essentials, Part 3: Making Key Provisions Permanent

January 21, 2015 at 1:14 pm

Our last post on our new chart book highlighted ground-breaking research suggesting that the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) help families at virtually every stage of life.  Today, we’ll explain why making several key CTC and EITC provisions permanent should be a top priority for Congress.

In 2009, policymakers lowered the earnings needed to qualify for a partial CTC, thereby expanding the credit for millions of low-income working families and making other families newly eligible for a partial credit. … Read more

Medicaid-Eligible Children Grow Up to Earn More and Pay More in Taxes

January 21, 2015 at 12:01 pm

People eligible for Medicaid in childhood earn more as adults, and thus contribute more in federal taxes, than other low-income people who weren’t eligible, a recent promising study published by the National Bureau of Economic Research (NBER) finds.  And those benefits, which help offset the cost of providing Medicaid coverage, grow with each year of eligibility.

These findings are the most recent evidence of Medicaid’s wide-ranging benefits to the nation as well as enrollees.  Nearly 30 million Medicaid enrollees — half of all people with Medicaid coverage — are age 18 or under.… Read more

Fewer People Having Trouble Paying Medical Bills

January 20, 2015 at 3:55 pm

Fewer people skipped needed health care due to its cost or reported trouble paying medical bills in 2014, a new survey finds.  These improvements, the first since the Commonwealth Fund began asking these questions roughly a decade ago, came as health reform’s major coverage expansions took effect in 2014.

Among the survey’s findings:

  • The number of people ages 19-64 without health insurance showed a statistically significant drop for the first time in the history of the biennial survey, from 36 million in 2012 to 29 million in 2014.
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Examining the President’s New Tax Proposals

January 20, 2015 at 3:09 pm

We’ve issued two pieces on the President’s new proposals, which he’ll discuss in tonight’s State of the Union address, to reduce the tax code’s tilt toward capital gains and use the new revenues to support work and help working families build skills and savings.

  • Robert Greenstein’s statement:

    In recent decades, economic growth has powerfully benefitted Wall Street, while leaving much of Main Street behind.  The plan that President Obama unveiled today would take large, important steps to help redress part of the imbalance and make prosperity more broadly shared.  The President’s new tax proposals will surely elicit howls of protest from various special interests and on ideological grounds; adversaries will make predictable claims that the proposals would harm the economy and jobs.  Yet while the proposals do present a major challenge to the status quo, they should benefit economic growth, not hinder it, while substantially helping tens of millions of middle- and lower-income working families and individuals.

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In Case You Missed It . . .

January 16, 2015 at 4:01 pm

This week on Off the Charts, we focused on state budgets and taxes, federal taxes, health reform, and food assistance.

  • On state budgets and taxes, Michael Leachman pointed to a new report showing that lower-income families pay a bigger share of their income in state and local taxes than wealthy families. He also listed five pieces of context for analyzing Kansas Governor Sam Brownback’s new budget.  Erica Williams noted that Kansas isn’t the only state facing budget woes caused partly by large tax cuts.
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Kansas Isn’t the Only Tax-Cutting State With Budget Woes

January 16, 2015 at 3:08 pm

As we noted this morning, Kansas is the poster child for the harmful consequences of large state tax cuts, which can open up huge budget holes and undermine the foundations of a strong state economy, like a high-quality education system. But Kansas isn’t the only state experiencing pain of its own making.  Big tax cuts are playing a major role in several other states’ budget woes.  For example:

  • North Carolina followed Kansas’ lead and enacted large cuts to personal and corporate income taxes in 2013. 
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Working-Family Tax Credit Essentials, Part 2: The Credits’ Lasting Benefits

January 16, 2015 at 1:11 pm

Our first post in this series introduced our chart book on the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), focusing on their well-known benefits of encouraging work and reducing poverty.  Today, we’ll highlight recent ground-breaking research suggesting that the EITC and CTC help families at virtually every stage of life.

As the chart explains, starting from infancy — when higher tax credits are linked to more prenatal care, less maternal stress, and signs of better infant health — children who benefit from tax credit expansions have been found to do better throughout childhood and have higher odds of finishing high school and thus going on to college. … Read more

Case for Repealing Medical Device Tax Is as Weak as Ever

January 16, 2015 at 12:41 pm

As the New York Times’ Robert Pear explained this week, health reform’s 2.3-percent excise tax on medical devices “has become a prime target for Republicans, some Democrats and a small army of lobbyists for the industry.  But a new report from the Congressional Research Service [CRS] challenges economic arguments that are being made to justify repealing the tax.”

The CRS report reaffirms what we’ve said repeatedly:  the tax, which will raise $26 billion over the next decade to help pay for health reform, has only a very limited economic impact, contrary to industry lobbyists’ dire predictions.… Read more

5 Pieces of Context for the New Kansas Budget

January 16, 2015 at 10:45 am

With Kansas Governor Sam Brownback releasing his budget this morning, it’s a good time for a refresher about what’s happened since Kansas enacted one of the largest state income tax cuts in history two years ago.

  1. Kansas’ finances are a mess. The tax cuts have proven even more expensive than originally imagined, leaving the state with far less revenue than it will need to pay for schools and other state services.  To get through the past two years, the governor has nearly drained Kansas’ operating reserves, leaving the state highly vulnerable to the next recession.
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