Backgrounder posted February 19, 2014
The Proper Tax Treatment of Interest
Treating interest properly in the tax code is essential to maintaining neutrality. Neutrality should be the guiding principle of tax reform. It holds that taxes should not influence—positively or negatively—the economic decisions of families, investors, entrepreneurs, or businesses. A neutral tax code is the most conducive to economic growth.
In debates about tax reform…
Issue Brief posted February 6, 2014
Economy Better, but Still Growing Too Slowly Because of Anti-Growth Policy
The new Bureau of Economic Analysis (BEA) report measuring how fast the economy grew in the fourth quarter of 2013 and for the entire year of 2013 confirms that while the U.S. economy has clearly picked up steam, it is still in the grip of a subpar recovery from the recession that ended in 2009.
The cost of this slack-paced expansion—compared to past recoveries—has been…
Issue Brief posted December 19, 2013
Business Tax Reform: Focus on Rate Reduction Now, Save Expensing for Later
Business tax reform is essential to increasing investment and restoring robust job creation and wage growth. Reform is necessary in large part because the U.S. has the highest corporate tax rate in the developed world. This lowers business investment in the U.S. and makes U.S. businesses less competitive in the global marketplace.
The current tax system also generally…
Issue Brief posted October 31, 2013
A Repatriation Holiday Would Not Create Jobs
The House and Senate have convened a conference committee in an attempt to reconcile the very different budgets they passed earlier this year.
Some have suggested that, if the Senate refuses to agree to tax reform in the course of negotiations, the House should seek a repatriation holiday instead. A repatriation holiday would eliminate almost all the tax liability…
Issue Brief posted October 29, 2013
Leave Tax Reform and Tax Increases Out of Budget Conference
The recent deal to end the government shutdown and lift the debt ceiling requires the House and Senate to convene a conference committee, where they will seek to reconcile the respective budgets each chamber passed this year. Conferees will face strong pressure to strike a “grand bargain” to lower the deficit by both cutting spending and raising taxes.
This is the wrong…
Issue Brief posted September 19, 2013
Tax Reform Should Eliminate the Deduction for State and Local Taxes
House Ways and Means Committee chairman Dave Camp (R–MI) and Senate Finance Committee chairman Max Baucus (D–MT) will face many difficult decisions as they proceed on tax reform. Among them will be whether to retain certain deductions currently in the tax code, including the deduction for state and local taxes.
Tax reform should eliminate the state and local tax…
Backgrounder posted September 12, 2013
A Territorial Tax System Would Create Jobs and Raise Wages for U.S. Workers
An intense debate is raging over the proper way to repair the broken system the U.S. uses to tax its international businesses. There is widespread agreement that the current system destroys jobs and suppresses wages for U.S. workers. However, there is a sharp division about how to fix the system’s shortcomings. One side argues for strengthening the current worldwide…
Issue Brief posted June 14, 2013
Senate Immigration Bill Does Not Require Payment of All Back Taxes
There are many serious flaws in the controversial Senate immigration bill, the Border Security, Economic Opportunity, and Immigration Modernization Act (S. 744). One such flaw is that it fails a standard of basic fairness to which immigration has long been held: It does not meaningfully require illegal immigrants to pay back taxes, interest, and penalties on all the…
Issue Brief posted June 4, 2013
CBO Report on “Tax Expenditures” Has It Wrong
The Congressional Budget Office (CBO) released a report on the distribution of “tax expenditures” that some are wrongly using to push for additional tax increases. This was inevitable because the report takes the wrong approach to the issue.
The CBO misnames “tax expenditures.” Congress has explicitly inserted these provisions (routinely called…
Backgrounder posted June 4, 2013
PEP and Pease Hurt Larger Families Most and Slow Growth
After a 12-year hiatus, Congress and President Barack Obama reinstated the personal exemption phaseout (PEP) and “Pease” in the fiscal cliff deal struck in the early hours of New Year’s Day. PEP raises taxes on high-income taxpayers by reducing, then eliminating, the value of their personal exemptions. Pease—which is named after Representative Donald J. Pease, who is…
Issue Brief posted May 16, 2013
Net Tax Increase in Obama’s Budget Over $1 Trillion
President Obama released his fiscal year 2014 budget almost two months after it was due by law. With all that extra time, the President had plenty of opportunity to clearly account for his tax increases. But like his budgets from previous years, this year’s effort hides the total tax increase he proposes.
For example, rather than put it with the other major tax…
Issue Brief posted May 15, 2013
Obama’s IRA Cap: A Cap on Defined-Contribution Retirement Savings Plans
President Obama proposes to cap the total value of taxpayers’ defined-contribution retirement savings accounts—such as Individual Retirement Accounts (IRAs) and 401(k)s—according to the maximum benefit permitted under defined-benefit plans. In 2013, that would be around $3.4 million.
This proposal would be a step backwards for savings policy, because it would increase…