December 20, 2014

dlim's blog

Tax Policy in the President's Budget

In his Fiscal Year 2013 budget, President Obama proposes an array of tax proposals. Some of his suggestions are new and would move the country’s unfair, inefficient and overly complex tax system in a positive direction. But some of the most costly proposals are the ones we’ve seen many times before. Four points stand out in the tax proposals in the Obama budget:

The President's Proposal to Limit Itemized Deductions is Still a Great Idea

For the fourth time in four years, President Obama has tucked a little gem of a tax policy proposal into his budget: the proposal to limit the tax benefit of itemized deductions to 28 percent.  It’s a great idea because it would reduce a large tax subsidy (i.e., “tax expenditure”) for those who need it least, improve the economic efficiency of the tax code and raise revenues that could be used as part of a deficit-reduction package. Last year the Congressional Budget Office estimated the president's proposal would raise $293 billion over 10 years.

Debating the Payroll Tax Cut: The Difference Between Stimulus and Growth

The current debate over extending the payroll tax cut well demonstrates that policymakers often mean different things when referring to policies that “help” or “expand” the economy. I often hear the words “stimulus” and “growth” used interchangeably, but when economists use them, we typically are making a distinction between different economic goals that apply to different circumstances.

Bernanke on Going Big in Both Ways

NOTE: an earlier version of this post appears on EconomistMom.com

Dynamic Deja Vu on Tax Policy

The “dynamic scoring” debate is back again.

Super Committee Republicans Already Showing More Willingness to Include Revenue-Side Solutions

The “no new taxes” pledge taken by Republicans in Congress has been a huge obstacle to achieving bipartisan agreement on a comprehensive deficit reduction plan. Many Republicans interpret the pledge as ruling out revenue increases of any kind, even those that close narrow loopholes and special interest deductions. The devotion seems to extend to a “grand bargain” for deficit reduction that would actually enact future cuts in tax rates, but pay for some of the revenue loss from those cuts by limiting deductions and loopholes.

How to Evaluate Economic Impacts of Proposed Tax Cuts

The biggest sticking point in the debt-limit talks has been the disagreement over tax policy.

Do You Believe in Magic -- or Deficit Reduction?

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Elected officials in both parties have made what I call “magical, mystery tax pledges” that are at odds with bipartisan approaches to serious deficit reduction:

Economic Report of the President Omits Some Important Points

Even if the new Economic Report of the President had actually discussed better ways to raise revenue or to make Social Security and Medicare programs more sustainable, it would have judiciously avoided using the controversial words “taxes” or “entitlements.”

The Rough Common Ground

By now we've seen a number of proposals for fiscal sustainability from groups with very different perspectives.