Build Back Better Will Cut Taxes For All But the Top 1% of Pennsylvanians

Thanks to our friends at the Institute on Tax and Economic Policy, we have new data on the impact of the tax changes in the Build Back Better plan that is under consideration in the House of Representatives as I write. The first table looks at the average change in taxes for families in seven income groups that would occur as a result of all the provisions of the bill as well as due to different parts of the billā€”the corporate tax changes, the income tax increase for some individuals, the state and local tax (SALT) cap adjustment, and the Child Tax Credit and Earned Income Tax Credit. As you can see, those in the bottom 20% of families, with an income under $22,400 and an average income of $12,900 will save an average of $1,070 a year. Every group above them receives a smaller average tax cut except theā€¦ Continue reading

The ā€œBillionaire Taxā€: What It Is and Why We Need It

UPDATE: Senator Ron Wyden has released his “Billionaires Income Tax” legislationā€”read the language of the bill here:Ā  https://www.finance.senate.gov/imo/media/doc/Billionaires%20Income%20Tax.pdf. As negotiations between President Biden and House and Senate members over the Build Back Better plan have developed in the last few weeks, a new tax proposal to fund the close to $2 billion investment in health care, child care, paid family leave, climate change, and other programs, has come to the fore: a ā€œbillionaire tax.ā€ While Senator Wyden and others have been discussing this proposal for some time, it is a relatively unknown concept and would be a new form of federal taxation. Here we briefly explain what it is and why it is an excellent idea. The new proposal is to tax the increased wealth of the richest Americans each year. The tax would apply immediately to tradeable assetsā€”stocks, bonds, mutual funds, and derivativesā€”where the value of the asset isā€¦ Continue reading

MEMO: The Corporate Profits Minimum Tax and Why We Need It

Democrats are set to introduce a 15% corporate minimum tax as a funding mechanism for the Build Back Better plan. The Corporate Profits Minimum Tax legislation would ensure that roughly 200 corporations that report more than $1 billion in profits to shareholders pay at least a 15% tax rate on those gigantic profits. It would stop giant, profitable corporations, such as Amazon, Bank of America, FedEx, General Motors, Netflix, and Nike, from escaping all federal taxes. These corporations and others like them make huge profits that they report to their stockholders in filings required by the federal government. But they take advantage of multiple tax loopholes to avoid paying federal corporate income taxes. This new tax would raise roughly $200 billion to $300 billion dollars over ten years. These revenues would enable the federal government to make new investments in helping families with children, health care, child care, elder care,ā€¦ Continue reading

Blockbuster Investigation on Tax Avoidance Shows Clear Need for Bold Federal Tax ChangesĀ 

By Erica Freeman Last monthā€™s ProPublicaĀ revelationsĀ identified what many experts,Ā someĀ lawmakers, andĀ a majority of AmericansĀ already knew about the U.S.Ā tax code:Ā Policymakers over the past several decades have created a system that allows some of the nationā€™s wealthiest individualsĀ toĀ pay little or noĀ federalĀ income tax each year.Ā Ā  Ongoing negotiations over the next round of recovery legislation give Congress an opportunity to reverse course by closing loopholes and rolling back tax cuts for those at the top,Ā thereby raising the revenue needed to strengthen the nationā€™s infrastructure and respond to economic and racial inequalities, according to aĀ new report from the Center on Budget & Policy Priorities.Ā  Improving and expanding the taxation of wealth will bring more balance to the countryā€™s tax code and raise the revenue we need to invest in a recovery that helps Pennsylvania and other states build a better future and an economy that works for everyone, not just the wealthy. Pennsylvania families contribute toā€¦ Continue reading

The Trump Tax Bill Wasn’t For You

By Sean Kitchen Itā€™s Tax Day 2018, and you know what that means?Ā  The countryā€™s wealthiest Americans are about to experience long-term gains from the Tax Cuts and Jobs Act.Ā  The Pennsylvania Budget and Policy Center is concerned about the effects of the tax cut law and legislation that would make temporary tax cuts permenant after 2025. Ā  Ā AĀ new report from the Institute of Taxation and Economic PolicyĀ shows that the top 1% will receive more federal tax dollars than the bottom 60% in 47 states, and the top 20% will gobble up the majority of returns from the temporary tax provisions that were baked into the bill as tax cuts for the middle class. The top 20% will also receive a larger and more disproportionate tax cut in relation to their income. The report published by the Institute of Taxation and Economic Policy explains that those in the top 20%ā€¦ Continue reading

A Temporary Setback on the Way to a Just America

The Trump-GOP tax cut bill passed the House on a party-line vote with twelve Republicans voting against it this afternoon. It Ā is likely to pass the Senate tonight. This process reminds us that history does not move in a straight line. There are moments, like this one, in which America takes a step away from its promise of equality and justice for all. A combination of ideological zealotry, partisan extremism, and financial power has given us legislation that will cut taxes for the richest Americans while ultimately raising taxes and insurance premiums for working people and the middle-class and taking health insurance away from 13 million people. Wall Street will benefit, but the rest of us will be harmed by higher taxes, insurance premiums, deficits, and interest rates, and, if the Republicans have their way, deep cuts to the social safety net. This legislation will ultimately rank in the sameā€¦ Continue reading

It redistributes from working people and the middle class to the rich. And that’s just wrong.

Originally published at KRC-PBPC. With all the controversy over the details of the tax cut bill that is moving towards a final vote in the House and Senate this week it is easy to forget about the basic features of the bill. As they did during the debate over repeal of the Affordable Care Act, the Republicans put forward noxious proposalsā€”to radically reduce the state and local tax deduction, to tax graduate student stipends, to eliminate the deduction for teachers who use their own funds in classrooms, and to eliminate the deduction for extremely high medical expenses among othersā€”and then removed them from the final proposal. But we shouldnā€™t be gratified that these horrible elements of the bill are gone when the basic framework of the bill, which has remained constant in every version considered by the House and Senate, remains so awful. The legislation is basically a huge andā€¦ Continue reading

On the Passage of the US Senate GOP Tax Bill

Marc Stier, director of the Pennsylvania Budget and Policy Center, released the following statement on the passage of the U.S. Senate GOP tax bill: ā€œBudgets are, it is frequently said, moral documents. If that is true, and we believe it is, then the tax plan adopted by the Senate today represents an extreme moral failure on the part of the Republican Party. At a time when incomes are becoming ever more unequal, the Republican tax plan will ultimately make the rich richer and the poor and middle class poorer. It will benefit corporations at the expense of families. And, because of the repeal of the individual mandate, it will cost 13 million people nationwide ā€” and 500,000 in Pennsylvania ā€” health insurance leading to 1000 to 2000 premature deaths in our state alone. Continue reading

The GOP Tax Bill: An Assault on Economic Equality and Democracy

Budgets, it is frequently said, are an embodiment of our moral ideals and commitments. If so, the tax plan adopted by the Senate on Friday represents an extreme moral failure on the part of the senators from the Republican Party who voted for it. At a time when incomes are becoming ever more unequal, the Republican tax plan will ultimately make the rich richer and the poor and middle class poorer. Not only will working people and the middle class suffer, but so will our whole country. And not only that: one has to wonder what kind of democracy America has, when our government acts in such utter disregard of a majority of the country and the common good. Many of the features of this bill that work to help the rich and harm everyone else are now well known. So letā€™s quickly review them with links to the hardā€¦ Continue reading

For Many Pennsylvanians, Insurance Premiums Increase Are Greater Than Tax Cuts

As we have pointed out previously, because it repeals the individual mandate, the Senate tax cut proposal will not only lead to 13 million fewer people having health insurance in the United States, but it will lead to much higher premiums for many who do purchase health insurance on the individual market. The CBOā€™s estimate was that premiums nationwide would increase by 10%. Last week we presented a very rough estimate of the impact of repeal of the mandate on the average cost of health insurance premiums in Pennsylvania and suggested that the average increase in premiums is likely to be higher than the average savings in taxes under the Senate plan. New research from the Commonwealth Fund provides more detailed information on the increase in premiums for Pennsylvanians at different ages. And their work reinforces our conclusion. In 2019, much of the benefit of the tax cut to middleā€¦ Continue reading