Tying Jobless Benefits to Corporate Tax Cuts Would Be Inappropriate

April 10, 2014 at 3:58 pm

Key House Republicans reportedly want to tie resuming federal unemployment insurance to extending various corporate tax cuts — including permanent extension of “bonus depreciation.”  Policymakers should reject any such effort, given that permanently extending bonus depreciation:

  • Entails huge cost.  Permanently extending the tax break, which allows businesses to take bigger upfront deductions for certain new investments, would cost $263 billion over the next decade, according to the Congressional Budget Office (CBO).
  • Has little bang for the buck.  Enacted in 2008, bonus depreciation was among the weakest federal measures to promote jobs and growth in the Great Recession. 
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Just the Basics: Tax Expenditures

April 10, 2014 at 3:00 pm

Tax expenditures — subsidies delivered through the tax code as deductions, exclusions, and other tax preferences — have been in the news as many policymakers have proposed cutting them to reduce the deficit, finance investments, reduce tax rates, or a combination of those goals.  As Tax Day approaches, we’ve updated several backgrounders that explain how the federal government and states collect and spend tax dollars.  Today, we review our revised tax expenditures backgrounder.

Tax expenditures reduce the amount of tax that households or corporations owe. … Read more

Senate Witness Misrepresents IRS Certification and Training for Tax Preparers

April 10, 2014 at 2:35 pm

Legitimate disagreement in policy debates is part of what democracy is all about.  Gross misrepresentation is not.  And it’s particularly inappropriate when it comes before a congressional committee.

Yet that’s what occurred Tuesday when Dan Alban, a lawyer at a libertarian legal institute who brought the lawsuit that bars the IRS from attempting to rein in incompetent or unscrupulous tax preparers, testified before the Senate Finance Committee.  Alban repeated his falsehoods in a Washington Times column Wednesday morning.

Alban was trying to counter striking IRS data showing very high error rates on tax returns claiming the Earned Income Tax Credit (EITC) that were prepared by preparers who are neither certified (they’re not lawyers, CPAs, enrolled agents, or the like) nor affiliated with a national tax preparation chain. … Read more

Chairman Ryan’s Obfuscation: Part 2

April 10, 2014 at 2:10 pm

I explained earlier today the hollowness of House Budget Committee Chairman Paul Ryan’s attempt to deny that his budget cuts low-income programs deeply.  Ryan’s defense was that since total federal spending grows under his budget, how can we say it contains cuts, rather than merely slowing the rate of growth?  We disposed of this in my earlier post, but I want to dig deeper here to expose a budget trick Chairman Ryan is playing.

Sure, total federal spending grows under his budget in nominal dollars. … Read more

GAO: Give IRS Needed Authority to Oversee All Tax Preparers

April 10, 2014 at 12:15 pm

The Government Accountability Office (GAO) this week added its voice to those calling on Congress to give the IRS the needed authority to require all paid tax preparers to demonstrate basic competence.

While some paid preparers (such as attorneys and certified public accountants) are subject to Treasury Department regulation and must meet professional competency requirements, many others — known as “unenrolled preparers” — aren’t.  The GAO pointed out that “in most states, anyone can be an unenrolled preparer regardless of education, experience, or other standards.”

The IRS launched a major compliance initiative in 2010 to require a basic level of competency among paid tax preparers. … Read more

SNAP Caseloads and Spending Continue to Fall

April 10, 2014 at 11:37 am

Participation in SNAP (formerly known as food stamps) has continued the downward trend that we described in our recent paper, new Agriculture Department data show.  About 240,000 fewer people received SNAP benefits in January 2014 than in December 2013, and about 1.2 million fewer people participated than in January 2013 (see chart).  This continued decline in participation shows that SNAP has functioned properly during the recession and the slow recovery:  it expanded to meet increased need, and it is gradually contracting as economic conditions improve.… Read more

Chairman Ryan’s Response to the Center’s Analysis Doesn’t Hold Water

April 10, 2014 at 10:26 am

House Budget Committee Chairman Paul Ryan took exception to our finding that 69 percent of the non-defense spending cuts in his new budget come from programs for people with low and moderate incomes.  But he makes no attempt to refute our calculations, and his response both defies logic and conflicts with his own budget and even his own words.

For starters, we derived the 69 percent figure from the cuts that Chairman Ryan displays in his budget.  We added up his cuts in mandatory and non-defense discretionary programs, calculated how much of them would apply to low- and moderate-income programs, and derived the 69 percent figure. … Read more

Ryan’s Medicare Proposals: the Latest

April 9, 2014 at 4:42 pm

House Budget Committee Chairman Paul Ryan’s Medicare proposals — summarized in a new CBPP analysis — have evolved since Ryan issued his Roadmap for America’s Future in 2010, but much is still the same in the budget plan he released last week.

The centerpiece of Ryan’s Medicare plan remains premium support — replacing Medicare’s guarantee of health coverage with a flat payment, or voucher, that beneficiaries would use to purchase coverage.  But the details have changed significantly over the years.

  • Ryan now retains a form of traditional fee-for-service Medicare as an option. 
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New York Times Calls Senate Finance Committee “Extenders” Vote Fiscally “Imprudent”

April 9, 2014 at 4:37 pm

The Senate Finance Committee has voted to reinstate dozens of temporary tax breaks that expired at the end of 2013 — without offsetting their cost.  A recent must-read New York Times editorial called the vote “imprudent.”  Indeed, we find it fiscally unsound.

The Senate Finance Committee bill would cost more than $85 billion to extend the so-called “tax extenders,” which are mostly corporate tax breaks that Congress has routinely extended year after year.  But that misrepresents the true cost of these tax breaks, because the bill would extend them for only two years.… Read more

Medicare Advantage Overpayments Help Insurers More Than Beneficiaries

April 9, 2014 at 2:29 pm

I noted yesterday that health reform scales back overpayments to private Medicare Advantage plans, thereby lowering premiums for all Medicare beneficiaries and extending the solvency of Medicare’s trust fund.  Insurers, arguing that curbing the overpayments results in direct benefit cuts for enrollees, often imply that they have used the overpayments solely to provide increased benefits.  But findings from a recent National Bureau of Economic Research study challenge this argument.

The study examined certain urban counties in which Medicare Advantage plans received substantial overpayments in the four years before health reform started phasing down the overpayments in 2012. … Read more

Just the Basics: Payroll Taxes

April 9, 2014 at 11:51 am

As Tax Day approaches, we’ve updated several backgrounders that explain how the federal government and states collect and spend tax dollars.  As policymakers and citizens weigh key decisions on how best to shape our future federal government, it’s helpful to examine where the dollars that comprise the budget come from and where they go.

The next in our series of revised “Policy Basics” backgrounders explains federal payroll taxes.

The federal government levies payroll taxes primarily on wages and self-employment income and uses most of the revenue to fund Social Security, Medicare, and other social insurance benefits. … Read more

Early Data Show Decline in Uninsured Under Health Reform

April 9, 2014 at 11:07 am

How many uninsured people have gained health coverage since the Affordable Care Act’s major coverage expansions took effect January 1?  While 2014 health coverage data from the major federal surveys won’t be available until mid-to-late next year, new data from three independent surveys suggest that health reform’s Medicaid expansion and subsidized marketplace coverage likely are already making substantial progress in reducing the ranks of the uninsured.

  • The latest results from the RAND Health Reform Opinion Study, released yesterday, show that the share of adults aged 18-64 without insurance fell by 4.7 percentage points between September 2013 and March 2014, from 20.5 percent to 15.8 percent.  
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