Register to Vote: Rock the Vote, powered by Credo Mobile

HOME

ABOUT US

OUR ISSUES

Information & Access

Nonprofit Advocacy

Regulatory Policy


PRESS ROOM

ACTION CENTER

PUBLICATIONS

THE WATCHER

OUR BLOGS


SIGN UP

Receive news, updates, and alerts!

DONATE

Help support our work


OTHER SITES

FedSpending.org

RTK NET

NPAction

Working Group on Community Right-to-Know

Citizens for Sensible Safeguards

Open the Government

OMB Watch Logo

Demanding a federal budget that is fair, responsible, and meets our nation's priorities

Home :  Federal Budget & Tax : 
Federal Budget & Tax:      News     Blog     Background    



Monday, July 21, 2008

Claims of "Magical" Tax Cuts Continue

The Center on Budget and Policy Priorities has released a new report discussing the oft-cited, and completely false claim that tax cuts pay for themselves. Even though this statement has been refuted many times, by CBPP, by outside academics, and even by President Bush's own Treasury Department, the claim continues to float around.

CBPP does a nice job hammering home the facts again about the impact of tax cuts in a very digestible brief:

The claim that tax cuts "pay for themselves" — i.e., cause so much economic growth that revenues rise faster than they would have without the tax cut — has been made repeatedly in recent years and is one of the many tax policy issues that is likely to receive renewed attention in light of the upcoming election. As explained briefly below, this claim is false. The evidence shows clearly that tax cuts lose revenue.

CBPP: EVIDENCE SHOWS THAT TAX CUTS LOSE REVENUE



Posted by Adam Hughes, 02:49:11 PM



Friday, June 27, 2008

BudgetBlog on Hiatus for Holiday: Happy Fourth Everyone!

Happy Fourth of July!
Just wanted to let our loyal BudgetBlog readers know we're going on a short hiatus next week. With Congress heading out of town for a short summer recess and the upcoming Fourth of July holiday next week, the Fiscal Policy team is heading out of town in order to escape the heat for some well-deserved vacation. This means, though, that the BudgetBlog will be dormant next week.

But don't despair. Craig and I will return in one short week on July 7 to continue to bring you all the news, gossip, information, and analysis on federal fiscal policy you've come to expect.

Hope everyone has a safe and festive Independence Day next week - be careful with those fireworks.



Posted by Adam Hughes, 06:09:19 PM



Friday, March 28, 2008

CRS Report: Estate and Gift Tax Revenues: Past and Projected in 2008

There are a few noteworthy findings in this CRS report on the estate tax:

  • Estate tax repeal would account for over 25 percent permanent extension of the 2001-2003 Bush tax cuts
  • In 2006, 0.93 percent of deaths resulted in taxable returns. In 2002, that number was 1.86 percent.
  • Estate and gift tax revenues accounted for 1.0 percent of federal revenue in 2006 - a decrease from 1.4 percent in 2002.



Posted by Craig Jennings, 10:39:15 AM



Friday, March 14, 2008

Vota-Round-Up, I: State of the Estate Tax

Six votes on the estate tax were held during yesterday's budget resolution vote-a-rama in the Senate, as follows:

  • Baucus amendment 4160: makes 2009 estate tax law permanent -- exemption $7 million per couple; rate 45%. Paid for via a reserve fund from projected surpluses Approved, 99-1.
  • Graham amendment 4170: exemption per couple $15 million; 35% rate. Rejected, 47-52.
  • Kyl amendment 4191: exemption $10 million per couple; rate starts at 15%, top rate 35%. No offsets. Rejected, 50-50.
  • Kyl amendment 4372: protects small businesses, family ranches and farms by providing a $5 million exemption, a low rate for smaller estates and a maximum rate no higher than 35%. Rejected 48-50.
  • Salazar amendment 4196: exemption 10 million per couple; rate 35% -- paid for via a reserve fund from projected surpluses. Rejected 38-62.
  • Landrieu amendment 4378: $10 million per-couple exemption and a 35 percent rate, with a small surcharge for large estates and several special tax breaks for small businesses and family farms. Rejected 23-77.


Posted by Dana Chasin, 02:35:53 PM



Democrats Pass Budget in House & Senate

The House and Senate successfully passed their versions of the FY 2009 budget resolution yesterday. The House passed their spending outline on a mostly party-line vote 212 - 207 and the Senate passed their version early this morning 51 - 44 (roll call not available yet). Sixteen Democrats in the House opposed the budget along with all Republicans and in the Senate, Sens. Olympia Snowe (R-ME) and Susan Collins (R-ME) supported the budget, while Sen. Evan Bayh (D-IN) opposed it.

The House and Senate versions are similar in a number of areas, but the House blueprint is more fiscally responsible - strictly adhering to PAYGO rules by requiring offsets for mandatory spending increases and any additional tax cuts - particularly offsetting changes to the alternative minimum tax. Way to go House of Representatives!

There were tons of amendments in the Senate all through the day and night on key fiscal issues. We'll be dissecting the amendments and votes throughout the day today here on the BudgetBlog. Stay tuned!



Posted by Adam Hughes, 09:25:16 AM



Thursday, March 13, 2008

Estate Tax Madness

The Senate has officially gone over the the bad place. Three out of the first seven amendments to the FY 2009 budget resolution propose to make costly changes to the estate tax. While only one of them was adopted, unfortunately the breakdown of the votes showed less support for a rational, fiscally responsible reform to the estate tax.

Here's a quick summary of the amendments:

  • Sen. Max Baucus' (D-MT) amendment to use projected surpluses in 2012 and 2013 to extend popular middle-class tax cuts and make changes to the estate tax by extending the 2009 levels ($7 million exemption for a couple, 45 percent marginal rate) passed overwhelmingly 99 - 1.
  • Sen. Ken Salazar (D-CO) offered an amendment that would have likely increased the exemptions for the estate tax to $10 million per couple and drop the marginal tax rate to 35 percent. This amendment failed 38-62, but garnered 15 more votes from Democrats who, quite frankly, should know better, than it did last year when a simliar amendment was offered by Sen. Ben Nelson (D-NE), which received 25 votes.
  • Sen. Jon Kyl (R-AZ) offered an amendment that would make similar changes in the exemption levels and marginal tax rates as Salazar's amendment, but would not offset the tremendous cost of such an amendment - likely around $750 billion over the next ten years according to the Joint Committee on Taxation. Kyl's amendment failed by a 50-50 vote.



Posted by Adam Hughes, 02:29:29 PM



Tuesday, March 11, 2008

JCT Report on Alternative Estate Tax Systems

In advance of tomorrow's Senate Finance Committee hearing, Alternatives to the Current Federal Estate Tax System, the Joint Committee on Taxation has issued a report at once broad and brief, "Description and Analysis of Alternative Wealth Transfer Tax Systems," (JCX-22-08), March 10, 2008.

The report, which explores tax policy relating to various approaches to intergenerational wealth transfer, is detailed without being overly technical, is worthwhile reading for anyone interested in estate, inheritance, and gift tax systems. See: Report.



Posted by Dana Chasin, 11:41:30 AM



Wednesday, February 13, 2008

OMB Watch up for Online Advocacy Award

Do you like OMB Watch? Would you like to boost our fragile self-esteem? Then please vote for us in the Golden Dot Awards, presented annually for excellence in online campaigning by the Institute for Politics, Democracy & the Internet at George Washington University.

OMB Watch has been nominated for Best Issue Advocacy Blog. The nomination is for all three of our blogs: Advocacy Blog, Budget Blog, and Reg•Watch.

Vote here: polc.ipdi.org/GoldenDots/voting.htm

(OMB Watch has the utmost respect for the other candidates and has vowed to run a clean campaign.)



Posted by Matt Madia, 05:23:53 PM



Friday, January 11, 2008

Contact Us!

Questions, comments, suggestions, and glad tidings can now be directed to the BudgetBlog inbox at:

(In an effort to prevent spam, our contact address appears as an image and without a link to the address.)

Posted by Craig Jennings, 11:49:37 AM



Thursday, December 20, 2007

Congress Abandons Fiscal Responsibility

OMB Watch released a statement yesterday afternoon harshly criticizing the Democratically control Congress and the president for abandoning fiscal responsibility in the final hours of 2007 after they entire year was spent adhering to or attempting to adhere to righting our nation's fiscal course. From the statement:

Adding insult to a year of fiscal policy injuries, Congress has abandoned fiscal responsibility by waiving pay-as-you-go (PAYGO) rules in order to pass a one-year patch to the alternative minimum tax (AMT) without offsets. This tax cut adds another $50 billion to an already expanding deficit next year, and will give fewer options for our children and grandchildren to seek solutions to the problems of tomorrow.

While I expect as much from President Bush, this is a huge disappointment from the new Democratic majority in Congress whose number one promise was to uphold pay-as-you-go (PAYGO) rules. So much for promises:

This vote is particularly disappointing as Democrats have gone to great lengths this year to comply with PAYGO rules, particularly on spending. From student loan reforms to expansions of the State Children's Health Insurance Program and Food Stamps, Democrats have negotiated the turbulent fiscal waters of the federal budget responsibly, diligently, even courageously. That is why at this point, after all that work and sacrifice, the compromises and the concessions needed to construct balanced solutions to the AMT problem, it is unacceptable for them to abandon their stated principles of fiscal responsibility because they fear Americans will not accept paying up front for the services and benefits the country demands.

As the statement makes clear, there is plenty of blame to go around in Washington for this policy failure. What an awful way to end 2007.





Posted by Adam Hughes, 12:49:17 PM



Tuesday, December 18, 2007

IRS Budget Cut Below Already Insufficient Levels

The omnibus appropriations bill passed by the House last night contains 3,500 pages and over $516 billion in spending. Yet with all that space (and money), Congress could not find enough room for even their own priorities from earlier this year for the Internal Revenue Service (IRS). Specifics of the IRS's funding take from the omnibus show the House has included $2.15 billion for taxpayer services, down slightly from the $2.155 proposed earlier this year, $4.78 billion for enforcement (down from $4.93 billion) and $3.68 billion for operations (down from $3.77 billion). What's more, the House has backed away from a requirement for the IRS to develop a strategic plan to address the tax gap. The total IRS budget request ($10.89 billion) is $203 million below even President Bush's request!. What is going on here?

So, just to review, despite a year in which congressional hearings revealed that the IRS is underfunded, runs a dangerous and wasteful privatization program, and has no strategic plan for addressing the tax gap, Congress decided to give it less money, allow the privatization program to continue, and let the IRS off the hook for developing a strategic plan.

And I wonder why people don't believe in government...





Posted by Adam Hughes, 03:15:35 PM



Wednesday, December 12, 2007

Does The Estate Tax Make The Economy More Efficient?

Some interesting research (via Brad Plumer's blog) making the case that the estate tax actually makes the economy more efficient. Here's the abstract:

To what degree should societies allow inequality to be inherited? What role should estate taxation play in shaping the intergenerational transmission of welfare? We explore these questions by modeling altruistically-linked individuals who experience privately observed taste or productivity shocks. Our positive economy is identical to models with infinite-lived individuals where efficiency requires immiseration: inequality grows without bound and everyone's consumption converges to zero. However, under an intergenerational interpretation, previous work only characterizes a particular set of Pareto-efficient allocations: those that value only the initial generation's welfare. We study other efficient allocations where the social welfare criterion values future generations directly, placing a positive weight on their welfare so that the effective social discount rate is lower than the private one. For any such difference in social and private discounting we find that consumption exhibits mean-reversion and that a steady-state, cross-sectional distribution for consumption and welfare exists, where no one is trapped at misery. The optimal allocation can then be implemented by a combination of income and estate taxation. We find that the optimal estate tax is progressive: fortunate parents face higher average marginal tax rates on their bequests.

That's a complicated way of making a common-sense point: having lots of idle rich kids blow their parents' fortunes on parties and expensive shoes probably isn't an optimal use of finite resources. But, as far as I know, nobody really tried proving it in any rigorous way until now.

You could also say the same for dynastic political power (AKA the Bush family), which often goes hand-in-hand with dynastic wealth. That hasn't turned out "optimally."



Posted by Matt Lewis, 11:52:33 AM



Tuesday, December 11, 2007

I Never Thought I'd Want Rosie Back, But...

The newest addition to The View, Whoopi Goldberg, is telling viewers that she wants to repeal the estate tax. Here's EPI's Jared Bernstein on her misinformation campaign.



Posted by Matt Lewis, 11:13:47 AM



Thursday, November 15, 2007

OMB Watch Statement on the Estate Tax
Submitted for the Record to the Senate Finance Committee

OMB Watch submitted a Statement for the record to the Senate Finance Committee to accompany the Committee report on yesterday's hearing, "Federal Estate Tax: Uncertainty in Planning Under the Current Law."

The Statement addressed the irregularities of the estate tax under current law facing taxpayers and tax planners as well as the important principles behind the estate tax. We hope the Committee and other policymakers will heed these:

OMB Watch favors an estate tax regime without any of the anomalies, gimmicks, and trap doors embedded in the current law. We strongly believe estate tax reform must not exacerbate the national deficit or force otherwise unnecessary and less progressive tax increases — there are certainly ways to structure a reform that is revenue neutral. We also believe it is crucial for any reform to maintain the important incentive for charitable giving present in the estate tax and honor the national commitment to social and economic mobility and equality of opportunity.

We were particularly encouraged to hear this message echoed in the testimony of Warren Buffett. Perhaps the most important message of the day was driven home by Mr. Buffett: "A meaningful estate tax is needed to prevent our democracy from becoming a dynastic plutocracy."

We were equally enouraged by the recognition by Committee Chair Max Baucus (D-MT) -- as reported by Bloomberg -- of the political reality that "repeal of the estate tax lacks support in the Senate."



Posted by Dana Chasin, 12:37:45 PM



Wednesday, November 14, 2007

Baucus and the Estate Tax: Setting the Record Straight

Today, the Senate Finance Committee heard from Warren Buffett and other witnesses about the merits and demerits of the federal estate tax at a hearing entitled "Uncertainty in Planning Under the Current Law."

Interestingly, BNA's write-up of the hearing summarized the position of the Committee Chair as follows:

The leadership of the Senate Finance Committee agreed Nov. 14 that they should pursue permanent repeal of the estate tax. "The estate tax is complicated and intimidating. It needs serious reform," Senate Finance Committee Chairman Max Baucus (D-Mont.) said at a hearing on the issue. "I support repeal."

In fact, these comments were from Sen. Baucus' opening statement. The reporter did not bother with his conclusory remarks, which went much further. To paraphrase, he said that everyone in the room knows that the federal estate tax will not be repealed, and he appealed to the witnesses for some guidance as to the appropriate exemption and rate levels.

He also made it clear that while action on the estate tax sometime in the next two years was necessary, it is by no means the most pressing item on the nation's tax policy agenda.

CLARIFICATION: The BNA article that we reference in this blog post was published before the end of the estate tax hearing in question as part of BNA's Daily Real Time Updates. While the article was still misleading, it may have been unavoidable due to publishing deadlines. BNA published more complete and improved coverage of the hearing this morning available here ($).



Posted by Dana Chasin, 04:10:59 PM




Latest Entries by Theme

All Themes

Appropriations & Spending

Federal Tax Policy

Income/Wealth Inequality

Budget Projections

Government Performance

Estate Tax

State Fiscal Policy

Watcher

Entitlements

Budget Process

Debt & Deficit

Oversight & Enforcement

Transparency

Privatization

Contact Us

Most Recent Entries for Federal Budget & Tax

GAO Report Details Disturbing Lack of Independence of Pentagon Contract Auditors

Minimum Wage Increases Minimally

America Continues to Drown in Debt

Byrd Postpones Second Supplemental, Two Other Approps Bills

JEC Ranking Member Highlights Troubling Trend in Income Inequality

Claims of "Magical" Tax Cuts Continue

Talk About Low Expectations

Bloch Deputy: Very Existence of the Office of Special Counsel "At Risk"

New CBO Report Shows Dire Consequences of Bush Tax Cuts, AMT Patching

Average Earnings Down for All Workers, Median Earnings Also Down for Full-Time Workers

Archived Entries for Estate Tax

July

June

March

February

January

December, 2007

November, 2007

October, 2007

September, 2007

August, 2007

May, 2007

April, 2007

March, 2007

February, 2007

January, 2007

November, 2006

October, 2006

September, 2006

August, 2006

July, 2006

June, 2006

May, 2006

April, 2006

March, 2006

February, 2006

January, 2006

November, 2005

September, 2005

August, 2005

July, 2005

June, 2005

May, 2005

April, 2005

March, 2005

January, 2005

July, 2004

June, 2004

May, 2004

April, 2004

March, 2004

February, 2004

January, 2004

December, 2003

November, 2003

October, 2003

July, 2003