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. … Read more

Congress Needs to Boost Disability Insurance Share of Payroll Tax

July 17, 2014 at 2:29 pm

Congress should increase the share of the Social Security payroll tax that’s devoted to Disability Insurance (DI) and reduce the share allocated to Old-Age and Survivors Insurance (OASI).  We explain in a new paper why that’s essential to avoid a 20 percent across-the-board cut in DI benefits in 2016, how Congress has reallocated payroll tax revenues many times in the past, and that reallocation has not been controversial.

The current Social Security tax is 6.2 percent of wages up to $117,000 in 2014, which both employers and employees pay. … Read more

Top 10 Reasons for Schools to Adopt Community Eligibility

July 17, 2014 at 12:15 pm

I joined thousands of school nutrition administrators from across the country in Boston this week for their annual conference to share information about how high-poverty school districts can eliminate applications and serve meals to all students at no charge under the new option known as community eligibility.  Over and over, I heard from people who spend their days feeding children about how much it pains them to watch a hungry teenager avoid the cafeteria out of embarrassment or to have to collect lunch fees from struggling parents.  … Read more

A Constitutional Convention Poses Grave Risks

July 16, 2014 at 4:33 pm

The idea of convening a constitutional convention to propose a balanced budget amendment or similar amendments raises grave problems, as we explain in a new paper.  A number of states have passed resolutions calling for such a convention, and proponents of a constitutional convention are targeting more states in an effort to obtain the 34 states needed to call one (see map).

A balanced budget amendment poses serious risks in and of itself.  But, as a number of legal experts across the political spectrum have warned, a convention could open up the Constitution to broader radical and harmful changes. … Read more

Helping Renters Afford Their Homes

July 16, 2014 at 4:31 pm

Today’s New York Times “Room for Debate” forum asks “Should Housing Policy Support Renters More?”  It’s an important discussion since, as we explain in this chart book, federal housing policy is imbalanced in two ways.  It favors homeowners over renters, and it targets a disproportionate share of subsidies on higher-income households (see chart).

This is the case even though, as Henry Cisneros, former Secretary of the Department of Housing and Urban Development, points out, “the primary focus of federal housing policy should be to help those most in need.”  Need among renters is rising. … Read more

Balanced Budget Amendment Likely to Harm the Economy

July 16, 2014 at 4:21 pm

A number of states may soon call for a convention to amend the U.S. Constitution to require that the federal budget be balanced every year.  But a convention would pose serious risks, and a balanced budget requirement would be a highly ill-advised way to address the nation’s long-term fiscal problems.  It would threaten significant economic harm while raising a host of problems for the operation of Social Security and other vital federal functions, as we explain in a new paper.… Read more

Medicaid Expansion Decisions Leading States Down Divergent Paths

July 16, 2014 at 2:24 pm

As a growing number of reports increasingly make clear, a state’s decision whether to expand Medicaid as part of health reform has real-life effects on its residents and its businesses.  In the 26 states and the District of Columbia that have expanded Medicaid (see map), the positive benefits are already playing out.  Here’s some of the latest information:

  • Hospitals are providing less uncompensated care.  In Arizona, hospitals reported that the Medicaid expansion is the chief reason for a 30 percent decline in the amount of uncompensated care they have provided so far this year, compared with a year ago. 
Read more

House GOP’s IRS Budget Cuts: A Field Day for Tax Cheats

July 15, 2014 at 4:40 pm

The IRS has absorbed big cuts in recent years that have weakened enforcement and damaged taxpayer service.  The House Appropriations Committee passed a 2015 IRS budget that would cut the IRS even deeper.  But that wasn’t good enough for the full House, based on the cutting frenzy on the House floor over the last day.

The House approved a series of Republican amendments that, taken together with the cuts in the underlying bill, would shrink the IRS’s enforcement budget in 2015 by more than $1.2 billion relative to 2014 funding.  … Read more

Bernstein on Five Years of Economic Recovery

July 15, 2014 at 3:22 pm

CBPP Senior Fellow Jared Bernstein testified today before the Joint Economic Committee on the progress that has been made in repairing the U.S. economy over the first five years of the recovery from the Great Recession.

Bernstein explained:

When markets fail as massively as they did in the late 2000s, quick and forceful action clearly helps offset the damage.  But to stop at stabilization, instead of rebuilding jobs and incomes that were lost over the downturn is a serious policy mistake, one that has proven to be extremely costly to working families.

Read more

New CBO Long-Term Budget Projections Tell Familiar Story

July 15, 2014 at 2:47 pm

The Congressional Budget Office (CBO)’s new long-term budget projections, released today, are very similar to those that CBO published in September 2013 and to ones that we released in May 2014.  They show that the nation’s fiscal outlook is stable for the rest of this decade and then worsens gradually.

CBO projects that, under current policies, the federal debt in 2020 will amount to 74 percent of GDP — the same level as in 2014.  The debt will rise slowly thereafter, reaching 106 percent of GDP by 2039.… Read more

Don’t Believe the Hype: Permanent “Bonus Depreciation” Not a Positive Step Toward Tax Reform

July 15, 2014 at 9:23 am

The House has voted to convert “bonus depreciation” — a large, temporary tax break that policymakers adopted during the recession that lets businesses take bigger upfront tax deductions for certain purchases such as machinery and equipment — into a permanent feature of the tax code at very substantial cost.  The Senate should not go along for two fundamental reasons.

First, as we have explained in a previous paper, permanent bonus depreciation is fiscally irresponsible — costing $276 billion over ten years, according to the Joint Tax Committee — and delivers relatively little economic benefit, even as a temporary measure.… Read more

John Oliver Debunks Some Estate Tax Myths

July 14, 2014 at 4:55 pm

John Oliver’s HBO show this weekend featured a segment on income and wealth inequality (warning: colorful language!), and Oliver cited our paper showing that 99.86 percent of all estates in 2013 owed no estate tax (see chart).

As Oliver mentioned and our paper explains, contrary to the myth that many people face the estate tax, the first $5.25 million of every estate (effectively $10.5 million per married couple) is exempt from tax (with that level indexed for inflation).  That means that very few estates owe any tax. … Read more