April 30, 2017

Posts on tax policy

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Tuesday, April 25, 2017 - 10:04 AM

Many elected officials in both parties have long called for tax reform, although they often differ on what tax-related issues need to be addressed.

As President Trump and members of Congress consider tax proposals to pursue this year, a new national survey by the Pew Research Center may provide some useful information -- and perhaps a surprise or two -- on what taxpayers themselves think about the tax system.

Supporting the general idea of reform, the survey found that 56 percent of the respondents viewed the federal tax system as unfair, up from 48 percent in early 2015. The survey had a 2.9 percent margin of error.

But the survey found little change in recent years in how people viewed their own tax burdens, and some lawmakers, media commentators and Trump administration officials might be surprised at how many people had no complaints about how much money they send to Washington.

“Just over half (54 percent) say they pay about the right amount in taxes, considering what they get from the federal government, while 40 percent say they pay more than their fair share,” the survey report says. Five percent thought they should be paying more.

Only...

Monday, April 17, 2017 - 12:22 PM

IRS Commissioner John Koskinen warned recently that funding constraints and staff reductions at his agency could result in fewer people paying their taxes and the government running higher budget deficits.

The full-time IRS workforce has shrunk by more than 17,000 since 2010, he said. Meanwhile, the agency’s workload has increased because more tax returns were filed and Congress made the tax system more difficult to explain and enforce.

“At well over 10,000 pages, our tax code is now the most complicated it’s ever been,” Koskinen said.

The partial budget plan that Trump released last month, however, called for cutting another $239 million in IRS funding in the coming fiscal year -- despite concerns that Treasury Secretary Steven Mnuchin had previously expressed about low IRS staffing and how it might reduce tax revenue.

Koskinen said in a speech this month that the IRS audited about a million people last year -- less than 1 percent of the individual returns filed and the lowest number of audits in...

Monday, March 27, 2017 - 9:57 AM

The Congressional Budget Office (CBO) has released an overview of certain tax breaks -- known as “tax expenditures” -- that can provide elected officials and the public with helpful information as President Trump and many lawmakers shift their focus to revamping the tax code.

“Tax expenditures, projected to total more than $1.5 trillion in 2017, cause (federal) revenues to be lower than they would be otherwise and, like spending programs, contribute to the deficit,” the CBO said in a recent blog post.

The Concord Coalition has long urged elected officials to reduce or eliminate many tax expenditures to help reduce the deficit while making the tax code simpler and more growth-oriented. Tax expenditures, however, receive far less public attention and congressional scrutiny than direct government spending.

“Current tax law includes an array of exclusions, deductions, preferential rates, and credits that reduce revenues for any given level of tax rates in the individual, payroll, and corporate income tax systems,” says the blog post by CBO analyst Joshua Shakin. “Some of these provisions are called tax expenditures because, like many government spending programs, they provide financial assistance for particular activities or to certain...

Friday, February 17, 2017 - 12:45 PM

President Trump and many lawmakers in both parties have promised to attack waste and substantially improve government efficiency. The Government Accountability Office (GAO) has just handed them a long list of opportunities to do so in its latest “High Risk List.”

With a large and growing federal debt, elected officials should vigorously pursue these opportunities to reduce unnecessary spending and collect hundreds of billions of dollars in unpaid taxes. In addition, Congress and the president should heed the GAO’s renewed warnings about the long-term fiscal challenges facing important but costly entitlement programs.

The High Risk List, which GAO updates at the start of each new Congress, spotlights 34 government activities or areas that the agency considers “vulnerable to waste, fraud, abuse and mismanagement or needing broad-based transformation.”

GAO, a nonpartisan investigative arm of Congress, reports that the government made “considerable progress” on problems highlighted in the 2015 list. The agency removed one area from the High Risk List: the sharing and managing of information related to terrorism, which U.S. Comptroller General Gene Dodaro called “a particularly...

Thursday, January 19, 2017 - 12:12 PM

With a new administration coming into office, a report on the nation’s fiscal health provides a timely and emphatic reminder of the need for the new president and Congress to pursue sweeping long-term changes in the federal budget.

Released this week by the Government Accountability Office (GAO), the report provides a good look at the nation’s unsustainable fiscal path and deserves close scrutiny by elected officials in both parties.

Although our nation’s leaders face an array of serious short-term challenges and difficult policy choices, the new report reminds them -- and the American public -- that the federal government is already “highly leveraged in debt by historical norms.”

So in addition to the near-term financing decisions that must be made, the GAO says, “a broader plan is needed to put the government on a more sustainable long-term path.”

The report draws on the work of the GAO itself as well as Congressional Budget Office (CBO) projections and the recently issued Fiscal Year 2016 Financial Report of the United States Government.

Their projections, the GAO says, “all show that, absent policy changes...

Friday, December 16, 2016 - 4:50 PM

Senate Majority Leader Mitch McConnell (R-Ky.) made headlines this week when he suggested that the GOP must pay for its campaign promises, stating his preference for “deficit-neutral” tax cuts and offsets for new spending.

“I think this level of national debt is dangerous and unacceptable,” McConnell told the press at a recent briefing. His comments come at an important time.

As a candidate, Donald Trump frequently made mention of the size of the debt, but some of his more popular proposals threaten to grow it even larger. Analyses of Trump’s proposed tax cuts put the cost between $3 trillion and $6 trillion. Incoming White House Senior Advisor Steve Bannon says he is “pushing a trillion dollar infrastructure plan” and many observers are waiting to see the size of Trump’s actual proposal.

The size of possible proposals is leading many Republicans, including McConnell and even the incoming White House chief of staff, Reince Priebus, to call for offsets. On “The Hugh Hewitt Show” on Wednesday,...

Tuesday, December 6, 2016 - 10:54 AM

No sooner had Steven Mnuchin confirmed that he was the President-elect’s pick for Treasury secretary than he raised eyebrows in both parties by saying that the new administration’s tax plan would not give an overall tax cut to high-income households.

“Any reductions we have in upper-income taxes will be offset by less deductions so that there will be no absolute tax cut for the upper class,” Mnuchin said. He also said the new administration’s tax plan would provide “the most significant middle-income tax cut since Reagan.”

These comments seemed to contradict the tax reform section of the Trump campaign website, which said taxes would be reduced “across-the-board.” Mnuchin’s statement, in a CNBC interview last week, is also at odds with the work of independent analysts who say the Trump campaign’s plan would deliver substantial tax cuts to high-income taxpayers.

Mnuchin’s comments raised...
Thursday, August 27, 2015 - 11:00 AM

It has been easy for advocates of generationally responsible tax and spending policies to look at Capitol Hill with dismay for the past few years. A few consequences of inaction and lack of bipartisanship include:

  • A complete breakdown in the federal budget process.

  • Continued struggles to replace arbitrary, shortsighted caps on discretionary spending with smarter deficit reduction.

  • Total inaction on addressing the main drivers of deficits in the coming years, rising health costs and an aging population.

  • More than 30 short-term extensions of transportation funding and a failure to eliminate the growing shortfall plaguing the Highway Trust Fund.

  • Multiple debt-limit showdowns, each of which threatened the United States’ credit rating and roiled financial markets.

Yet in the past few months, I’ve been pleased to see at least a few positive signs.

In over two dozen staff and member meetings conducted over the first two months of my tenure at Concord, we’ve found that some lawmakers are coming back around to the fiscal realities facing them this fall and in the coming years. Part of the...

Thursday, March 12, 2015 - 1:15 PM

In less than three months, the highway bill enacted last July will expire and the program’s trust fund will face imminent depletion. At that point, Congressional failure to act would cause tens of thousands of infrastructure projects to be put on hold and would jeopardize construction jobs across the country.

The highway trust fund has historically operated on a “user pays” principle, where motor vehicle and fuel taxes paid by those who directly benefit from roads fund programs to maintain and improve the system. However, when Congress last raised the federal gas tax in 1993, lawmakers chose not to index it to inflation. As a result, the gap between revenue and expenditures has grown as the real value of the tax has declined.

As the chart above shows, there would be no shortfall in the highway trust fund today had its dedicated revenue source been allowed to grow with inflation. But instead of rectifying this problem or finding an alternative source of dedicated revenue, Congress has largely relied on fiscally irresponsible patches funded by...

Tuesday, December 2, 2014 - 11:23 AM

Lawmakers are now focusing on extending a series of tax provisions mainly benefiting businesses for one year after a much larger deal that would have added hundreds of billions of dollars to the deficit collapsed last week.

Initially, lawmakers were considering making a few temporary provisions permanent while extending most other provisions through 2015 -- without offsetting a single dollar of lost revenue. If Congress were to pass legislation resembling that deal, it would have added roughly $530 billion to the deficit over 10 years.

These provisions -- collectively known as “tax extenders” -- are temporary measures that, like other tax expenditures, essentially subsidize certain special interests or activities. Making them permanent, or even just extending them again without offsetting the lost revenue, would be fiscally irresponsible. Any tax provision that decreases revenue should be offset by eliminating other provisions in the tax code or cutting spending. Unfortunately, neither the House nor the Senate seem to be concerned with finding offsets, even though offsets are required under pay-as-you-go (PAYGO)...