One of the recurring themes of recent budget debates has been partisan differences over the appropriate level of revenues, with Republicans rejecting any increased revenue proposed by Democrats in budget negotiations. But in separate releases yesterday, Senate Democrats proposed reducing revenues below the levels proposed by House Republicans. While this may seem like an April Fool’s joke, the numbers don’t lie.
Update: Two days later, the Senate Finance Committee amended the legislation to extend nearly all of the provisions that had been allowed to expire. See our blog post for analysis of the final package.
In a letter to the Ways & Means Committee, CRFB President Maya MacGuineas states that Chairman Dave Camp's tax reform draft made the right choices in choosing how to deal with the tax extenders and potential revenue from economic growth. The full letter can be seen here.
Last week, we made the case that an expired provision known as bonus depreciation be treated separately from the other tax extenders, both because it was intended as temporary stimulus and because the small cost of a one-year extension masks the huge cost of making it permanent. Specifically, extending bonus depreciation for one year would cost about $5 billion (before interest) while extending it year after year would cost $300 billion.
Senate Budget Committee Chair Patty Murray (D-WA) introduced legislation yesterday to cut taxes for low- and middle-income workers in a few different ways. The legislation is intended to be fully paid for, and although there is no official CBO or JCT score, it appears to accomplish that goal.
This is the sixteenth post in our blog series, The Tax Break-Down, which analyzes and review tax breaks under discussion as part of tax reform. Previously, we wrote about the Charitable Deduction, which lets itemizers deduct the amount they donate to charity. Read more posts in the Tax Break-Down here. This blog examines the provisions that expired at the end of 2013.
In the coming weeks, both the House and Senate are expected to begin discussing what to do with a number of expired tax provisions known as the "tax extenders." Most of these provisions are extended year after year and have become, in many ways, a fixture of the tax code. Bonus depreciation does not fall into this category.
While Ways and Means Chairman Dave Camp's (R-MI) Tax Reform Act of 2014 (TRA) misses a critical opportunity to use tax reform to slow the unsustainable growth of the federal debt, his proposal should be commended for abiding by pay-as-you-go rules and responsibly paying for the set of expiring tax provisions often called the "tax extenders" and certain temporary expansions of refundable tax credits.
In the wake of the release of House Ways and Means Committee Chairman Dave Camp's (R-MI) tax reform discussion draft, some misconceptions have been spread about both its potential benefits and drawbacks. In this post, we will look into four of these misconceptions.
Misconception #1: The draft raises corporate taxes by $500 billion to pay for tax cuts for individuals.
We talked last week about several policies making their first appearance in the President's budget. What we didn't mention is that in addition to introducing new policies, the President has dropped a few old ones. Among the policies the President had previously proposed but did not include in this year's budget are: