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Taxes

When Does a Corporate Income Tax Become a VAT? Or Why Do Conservatives Oppose a Flat Tax for Business?
e21 Staff Editorial | 2012-01-30

On the heels of his State of the Union Address, President Obama’s Administration is planning to release a reform proposal for the corporate tax system. The plan is supposed to be released in early February, perhaps on the same day as his budget proposal for fiscal year 2013.

Capital Gains Tax Rates Are Higher Than You Think, and Getting Higher
e21 Team | 2012-01-27

The President’s State of the Union Address included discussion of the proper level of taxation for investment income. Specifically, the President suggested it was improper for investment income to be taxed at a much lower rate than labor income. This obscures the actual taxation rates faced by investors.

Populist Rhetoric Does Not a Plan Make
James C. Capretta | 2012-01-25

There wasn’t much suspense in the run-up to last night’s state of the union address because President Barack Obama long ago signaled the kind of populist and heavily political speech he was going to deliver.

The Payroll Tax: Same Problem, New Year
e21 Team | 2012-01-09

The White House opened 2012 with deputy press secretary Josh Earnest saying a full extension of the payroll-tax cuts through 2012 was the last “must-do” item left on the president’s congressional agenda heading into November’s election. The conference committee is appointed and will convene when the House returns on January 17th, and much of the political banter will revolve around how to off-set the costs of a payroll-tax extension. However, both liberals and conservatives are starting to question the greater meaning of reducing payroll-tax revenue which is designed with the specific purpose of funding Social Security and the lack of wisdom behind such a reduction.

Consequences of a Payroll Tax Extension
e21 Team | 2011-12-09

Congress is debating whether to extend a payroll tax cut that was once thought to be a temporary measure to help stimulate the economy. Despite what the chief actuary for Social Security wrote in a recent letter, this debate could have serious consequences for the program long term.

Pro-Tax Forces Sow Confusion Regarding the Top 1%
e21 Staff Editorial | 2011-12-06

The statement that “most of the income growth over the past 30 years has gone to the top 1%” is confusing because the households in the top 1% in 1981 were not the same as the households in the top 1% in 2011. All we really know is that the income of today’s top 1% of taxpayers is higher than the income earned by the top 1% a generation ago. What else can we conclude about the tax data on the top 1%?

Retrospectives on the Tax Reform Act of 1986
e21 Team | 2011-10-24

Last Friday saw the 25 year anniversary of the Tax Reform Act of 1986. This act was the most recent tax simplification bill, and passed with the sponsorship of both parties. The bill reduced top marginal tax rates from 50% to 28% and consolidated tax brackets by weeding out deductions and exemptions from the tax code. Here are a few retrospectives on the bill.

High Stakes Battle in Credit War
e21 Staff Editorial | 2011-10-11

The latest battle in the ongoing war for the future of financial intermediation is currently unfolding in the high balance mortgage space. The outcome of this battle will be telling because if the private sector cannot be trusted to set the terms and conditions for collateralized loans made to high income households, it’s not much of a leap to suspect the war will end in the full socialization of credit risk.

Thinking through the White House’s Plan to (Further Cut) Payroll Taxes
e21 Team | 2011-09-28

A major part of President Obama’s announced jobs plan came in the form of cuts to payroll taxes. The employee share of payroll taxes is cut in half, while the employers’ share is also cut in half until they reach a total payroll of $5 million. Lowering the employer’s rate lowers the marginal cost of hiring additional workers, which some argue might induce more hiring. Lowering the worker’s share results in an unexpected windfall for employees, but may not fundamentally alter hiring and firing decisions. The CBO has suggested that employer-side tax cuts may be more effective than employee-side ones.

Road Map to a Growth Economy
e21 Staff Editorial | 2011-08-17

Over the weekend, Jackie Calmes penned an “economic memo” in the New York Times that was critical of conservatives’ opposition to tax increases. The piece relied on selective quotes from conservative economists, sell-side forecasters, and some academics to undermine the basic conservative approach to fiscal policy. The piece suffers from two main flaws: (1) it suggests a consensus where none exists on the potential benefits of near-term stimulus; and (2) it treats all forms of revenue increases the same, despite the dramatic differences in economic consequences and the potential revenue gains from the economic growth unleashed by broad-based tax reform.


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