The Center for a Free Economy believes that getting fiscal policy right is the heart of getting government economic policies right. That means a pro-growth tax code which raises enough money for modest and well-designed government spending programs. Essential to fiscal policy is health care policy, which today dominates both tax and spending outlooks.
Recent News about Fiscal Policy:
Comedian Bill Burr this week went off on a totally not safe for work rant about Rep. Alexandria Ocasio-Cortez’s plan to impose a 70 percent tax rate on all income earned above $10 million. It’s hilarious and worth a listen, but do use earbuds for the sake of your more delicate neighbors. Burr makes a couple of good observations on the topic. First, he points out that no one should have to pay 70 percent of any of her income to the government. This is an important step conservatives often skip as we seek to dive right into policy arguments. As Arthur Brooks has famously pointed out, first you make a value alignment with your listener, then from that common value alignment you make a policy argument. Burr does that here simply and colorfully. Burr also helpfully uses an incarnational example to illustrate his point. He asks why the kid [...]
By Chris Morris, Odds are you’re paying too high a tax bill today. The good news, though, is that means you could see a notably higher refund next year. A research note from Morgan Stanley estimates 2019 refunds will top this year’s by 26%, working out to an extra $62 billion given back by the Internal Revenue Service. Payroll taxes are where people have been overpaying, says the investment firm, as most haven’t changed their withholding. Combine that with the GOP’s tax bill, which was passed last December and it increases the odds of a nice refund. The bulk of the refunds, says Morgan Stanley, will be sent in February. And that could have some positive effects for the economy. “We expect this boost in tax refunds to result in a sharply higher savings rate and elevated sales of big-ticket items in February and March 2019,” the firm wrote. The bulk of people [...]
by Ryan Ellis 2020 Democratic presidential candidate Sen. Kamala Harris, D-Calif., on Monday tweeted out that the middle class got their taxes raised under President Trump’s signature Tax Cuts and Jobs Act. Her rationale? That preliminary reports from the IRS indicate that refunds are down very slightly on a very small sample of tax returns e-filed so far. This is an absurd, bad faith statement on at least two levels. The first problem is that a tax refund’s size has nothing to with whether or not one’s tax liability went up or down. Tax refunds are the product of overpaying the IRS, and therefore giving them an interest-free loan all year until you file your taxes and get your own money back. That number can go up or down every year for any number of reasons—for example, the IRS lowered the amount of tax withheld from paychecks in 2018 to account for the [...]
The Bureau of Labor Statistics employment report for January shows the US economy added 304,000 jobs in the first month of the year. This is 139,000 more jobs than economists had anticipated when looking at projections earlier that month. The robust jobs market can be attributed to the implementation of the Tax Cuts and Jobs Act. The act is a pro-growth, pro-family policy that was passed by Congress in December 2017 and went into effect January 1, 2018, with the intention of reducing taxes on Americans at every income level. The act was not just designed to provide relief to working Americans, but provide more opportunities for Americans seeking to find work as well. This month’s employment numbers show that the act is working and giving the economy the boost it needs by creating jobs even when a quarter of the government is shutdown. Further, economic growth created by tax [...]
By Ryan Ellis The Senate Finance Committee this week held a hearing on the initial impacts of the Tax Cuts and Jobs Act of 2017. Helpfully, Congress' non-partisan Joint Committee on Taxation provided some tables to show the effects the new tax reform law will have on the tax landscape. In particular, JCT's analysis of itemized deductions stands out. Taxpayers can choose between taking a "standard deduction" ($12,000 for singles and $24,000 for married couples under the new tax law) and totaling together "itemized deductions" (mostly mortgage interest, charitable contributions, and up to $10,000 of state and local taxes). The tax law doubled the standard deduction to these current levels, and curtailed greatly the formerly-unlimited state and local tax deduction. As a result, the middle class will abandon itemizing in droves: As seen above, families making between $50,000 and $200,000 (a pretty good proxy for the middle class) sees a [...]
By Alan Reynolds The Treasury Department is said to be studying the idea of providing some sort of inflation-protection (indexing) for the taxation of capital gains. Rep. Devin Nunes (R-CA) has introduced a bill (H.R. 6444) to do just that. Predictably, Washington Post writer Matt O’Brien instantly dismissed the idea as “Trump’s new plan to cut taxes for the rich.” O’Brien relies on a two-page memo from John Ricco which yanks mysterious estimates out of a black box – the closed-economy Penn-Wharton Budget Model. The “microsimulation model” predicts that the Top 1 Percent’s share of federal income taxes paid could fall from 28.6% to 28.4% as result of taxing only real capital gains. “That’s real money,” exclaims O’Brien. No model can estimate how much revenue might be lost by indexing (if any) because that depends on such unknowable things as future asset values, future tax laws and future inflation. Yet [...]