Fiscal Policy2018-08-31T19:22:02+00:00

Fiscal Policy

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. 

Tax Policy
Federal Budget
Entitlement Reform

Recent News about Fiscal Policy:

75 Conservative Groups: “We oppose any carbon tax.”

Dear Members of Congress, We oppose any carbon tax. A carbon tax raises the cost of heating your home in the winter and cooling your home in the summer. It raises the cost of filling your car. A carbon tax increases the cost of everything Americans buy and lowers Americans’ effective take home pay. A carbon tax increases the power, cost, and intrusiveness of the government in our lives. Sincerely, Grover Norquist President, Americans for Tax Reform James L. Martin, Founder/Chairman Saulius “Saul” Anuzis, President 60 Plus Association John Droz Jr. Physician and Founder, Alliance for Wise Energy Decisions (AWED) Marty Connors Chair, Alabama Center Right Coalition Mead Treadwell Former Lt. Governor, State of Alaska Chair, Alaska Center-Right Meeting Dick Patten President, American Business Defense Council Phil Kerpen President, American Commitment Thomas Pyle President, American Energy Alliance Brent Wm. Gardner Chief Government Affairs Officer, Americans for Prosperity Lisa B. Nelson [...]

June 10th, 2019|Categories: Carbon Tax, Center for a Free Economy, Fiscal Policy|

Fund infrastructure by popping the inflation tax

President Trump and congressional Democrats last month pledged to commit $2 trillion in infrastructure projects over the next decade. The slight problem they face? No one has any idea how to pay for it. Neither party wants to run up more debt. Republicans are opposed to higher taxes. Democrats are opposed to spending cuts. What to do One idea is for the Treasury Department to remove inflation from the capital gains tax, something legal scholars believe could be done by regulation. Known as “capital gains indexing,” the idea is simple: Instead of a capital gain being defined as what an asset is sold for minus what it is bought for, it could instead be defined as what an asset is sold for minus what it is bought for plus inflation since purchase. Take, for example, a home sold for $500,000 and purchased for $100,000. Under the current tax rules, the capital gain [...]

May 15th, 2019|Categories: Capital Gains Tax, Center for a Free Economy, Indexing Capital Gains, Ryan Ellis, Tax|

Larry Kudlow Should Get President Trump to Index Capital Gains to Inflation

By Ryan Ellis It was reported today that Larry Kudlow will be named the new director of the National Economic Council at the White House. A longtime veteran of the supply side tax movement, Kudlow is expected to steer the West Wing and President Trump in a solidly pro-growth direction. There's one project that Kudlow needs to get to work on right away: indexing the basis of capital gains to inflation. This is a cause which has been close to his heart for many years. Just last August, Kudlow wrote an op-ed for CNBC urging President Trump to do this by executive order. In that op-ed he wrote: Former Treasury economist Gary Robbins estimates that indexing capital gains for inflation [in 2017] would, by 2025, create an additional 400,000 jobs, grow the U.S. capital stock by $1.1 trillion and boost GDP by roughly $500 billion. That all translates to an additional $3,600 for the average household...Capital [...]

May 9th, 2019|Categories: Center for a Free Economy, Fiscal Policy, Indexing Capital Gains, Ryan Ellis, Tax|

Not just Mr. Moneybags: Ending the capital gains inflation tax helps ordinary Americans too

by Ryan Ellis | August 08, 2018 In the past week, there has been a flurry of press accounts that President Trump has directed the Treasury Department to examine whether they have the power to let investors index cost basis to inflation when calculating capital gains. This has taken the press corps by surprise, but it is an issue that has been around a long time — dating all the way back to a 1992 memo (updated in 2012) by former Reagan assistant Attorney General Charles Cooper. The assertion Cooper and conservatives like Americans for Tax Reform, the National Taxpayers Union, the Club for Growth, and my own Center for a Free Economy are making is a simple one: “Cost” is not defined in the tax statute, and therefore the Treasury Department has the authority to define “cost” in a reasonable way. A levelheaded way to define the cost of an investment [...]

The Senate Tax Reform Bill Cuts Rates For Small Businesses And Flow Through Firms

By Ryan Ellis This week, the U.S. Senate will consider their version of fundamental tax reform. A key area of debate here has been the treatment of non-corporate businesses--sole proprietorships, Subchapter-S companies, partnerships, and LLCs--compared to incorporated firms. Unlike corporations, these flow through businesses don't pay taxes themselves. Rather, the taxes "flow through" or "pass through" to the business owner, who pays taxes on the business profits at his own marginal income tax rate. Senator Ron Johnson (R-Wisc.) and others have raised the concern that the corporations are getting a better deal than the flow throughs. Below are some answers to this concern: The worst tax treatment for flow through firms is current law. Should tax reform fail, mature flow through firms will face taxation under current law. That means a federal income tax rate of 39.6 percent, plus either a self-employment or an investment income surtax of 3.8 percent, [...]

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