The House Ways and Means tax bill released today is skewed in favor of rich people, is even more costly than the original 2017 law, and fails to deliver for working-class families and small businesses.
A thread 🧵 Let’s start w/ the bill’s failure to deliver for families on the #ChildTaxCredit – 17 million kids today do not get the full $2,000 max credit b/c their families don’t earn enough – these are parents who drive delivery trucks, clean offices, care for the elderly, etc.

With House Republicans meeting to begin to flesh out their tax bill, it feels like an important time for a thread on what a better tax bill would look like. One easy course correction Republicans should take: don’t take healthcare and help buying groceries away from families or make college more expensive for the people you’re supposed to be helping. Press delete on the left side of this chart.

Feels like a good day to repeat that there is no reason rich car dealers, beer distributors, & gas station owners – who don’t pay corporate taxes – should not pay individual income taxes like other rich people
Passthrough deduction is a trickle-down failure that should end The passthrough deduction is heavily tilted in favor of very rich people who are doing great and don’t need these tax cuts to continue

The top tax policy priority in year-end negotiations should be delivering the full #ChildTaxCredit to 19M children who now get < the full amount or zero b/c their families’ incomes are too low.
Our new report w/ state-by-state numbers on these children:
cbpp.org/research/feder… The business community is pressing Congress to pass corporate tax cuts– undoing provisions of the Trump tax law that offset some of the cost of huge corporate rate cuts. The #ChildTaxCredit is a far higher priority & certainly no corporate tax cuts should proceed w/o the #CTC.

Good read from @ezraklein

I just want to pick up on one of its observations on the right from Pippa Norris: “they’re not always right-wing on economics”

This is hugely important for tax and other policy areas

nytimes.com/2022/11/12/opi… Even if one agrees that non-economic issues have increased in importance, in a world where nothing matters but everything matters, economic policy debates still matter
And the fact that many social conservatives are more economically liberal than sometimes assumed is critical

Here is a three-part thread on the IRS funding in the Inflation Reduction Act:
1.Current state of the IRS: gutted by Republicans
2.This bill funds a re-build: computer systems and workforce to reduce the tax gap
3.Republican response is reckless and needs to be engaged Starting in 2010, Republicans, particularly in the House, gutted the IRS. Phone calls are not answered, computer systems are held together, in effect, with duck tape, and the audit rate for millionaires has plummeted:

Here’s a quick thread on the 1% excise tax on stock buybacks that the Senate is now adding to the Inflation Reduction Act.

It’s excellent policy. It passed the House and it raises $125 billion over ten years. Corporations have two basic ways to distribute profits to their shareholders: issue dividends (the traditional route) or offer to buy back a certain number of their own shares, which in turn raises the value of remaining stocks held by individuals and institutions

One of the things that surprises me about the current tax debate is how infrequent it is to see the words “leveraged buyout” come up given their integral connection to one of the three main revenue raisers, i.e. carried interest The policy question before the Congress on the carried interest loophole is whether the people who structure leveraged buyouts (LBOs) should pay taxes like everyone else, including investment bankers who do similar work

Thread: The new #BuildBackBetter framework legislation is paid for with a package of revenue offsets that:
1.Require higher-income people to pay a fairer amount of tax;
2.Reduce unwarranted tax advantages of profitable corporations (eg tax havens);
3.Reduce the “tax gap” In sum, the Administration reports that the three revenue buckets raise $1.85 trillion over ten years: $650 B from high-income individuals, $800 B from large multinationals, and $400 B from reducing the tax gap. A solid package to pay for critical investments.

Thread: The #BuildBackBetter framework would extend for 1 year the Rescue Plan expansions of the #ChildTaxCredit & EITC for adults not raising children & do important work but for low wages

Plus: it makes the driver of the child poverty reduction–“full refundability”– permanent! The framework extends for one year the Rescue Plan’s full #ChildTaxCredit expansion: $3,600 for young children and $3,000 for 6-17 year-olds.

Here’s a tax policy must-read from two top economists, @gregleiserson of CEA and @dannyyagan of OMB: they find, conservatively, that the wealthiest 400 families paid an average income tax rate of just 8.2% over 2010-2018
bit.ly/39vMoXv It’s featured this morning in this New York Times Story by @jimtankersley:
nyti.ms/39uC16f

And back to their op-ed: here’s the NFIB on the economic policy response to the pandemic: “Washington’s response has often made it harder.” It seems they missed this @greg_ip piece in WSJ: “How the U.S. Nailed the Economic Response to Covid-19”:
on.wsj.com/2ZcXrTr Given that on these small business PPP “loans”: “More than 90% of the jobs at firms that received PPP loans would have been preserved without the program” – one would perhaps see some gratitude from the NFIB but, no

It’s hard to know where to begin with this one & it’s painful to have to link to it & risk spreading it around even more but here are a few points on this op-ed, including how it elides whose taxes are actually going up and ignores whose are going down:
bit.ly/3EAm5Oa “the small business deduction would be capped”: at what level? It doesn’t say. Maybe at $10,000? No, it’s capped at $500,000. This means that the joint filers with such income up to $2.5 million still get the full deduction. I wonder why they left that out.

Dusting off this paper from @dashching and me from the last time capital gains taxes were hotly debated. More to follow but here’s a quick thread on some of the still applicable content.

bit.ly/3dLHusw As top tax economist Joel Slemrod summed it up during the Bush tax cut debate: “there is no evidence that links aggregate economic performance to capital gains tax rates.”

Stars are aligning to rebuild the IRS & address tax gap. Here’s our take on need for multi-year discretionary cap adjustment, & a multiyear mandatory funding stream to help pay for recovery legislation– to be combined with increased reporting requirements
bit.ly/3dSjLW4 The depleted state of the IRS is well-known. The time has come to do something about it. Enforcement funding has been cut sharply over the last decade:

Conservative groups are likely going to pump out pieces that argue that the corporate tax rate increase is going to hurt the recovery & corporate lobbyists are going to pounce on these.
A few respectful requests for tax reporters and other debate participants to probe on these. 1.Where’s the evidence?

We just ran an experiment. The corporate tax rate was cut deeply. Where is the evidence it had any discernible economic benefit to go along with the scope and cost of the change? How do they explain this chart?:

President Biden’s #AmericanJobsPlan will make the economy stronger & the tax code fairer by raising the corporate tax rate & limiting the ability of corporations to shift profits & investments overseas and using the revenue to finance a 21st century infrastructure.

Thread Raising taxes on corporate profits by partially reversing the 2017 tax cuts won’t hurt the economy & the investments they finance will strengthen it and broaden opportunity. The costly 2017 law slashed the corporate tax rate to 21% w/little discernible effect on the economy.

With the temporary provision moving, there is growing excitement to make the Child Tax Credit expansion permanent. Along with this push, a healthy debate has begun on design elements

Here I want to address one small part of this design discussion which relates to EITC take-up One key question – of which much more deep digging is needed – is on what roles the IRS and SSA should play in administering a permanently expanded child tax credit/child allowance.

Previously, I did a thread on a double standard around work, the Child Tax Credit, & the tax treatment of the inheritances of wealthy heirs

With House passage (!) & shift to the Senate, I wanted to focus on a double standard stemming from the Child Tax Credit’s creation in 1997 In 1997, the original child tax credit was intentionally designed to encourage – some – parents to work less: “some cultural conservatives promote the credit as a way to entice more mothers to stay at home with their children.” wapo.st/3aZz0N1

I sense a few double standards present in the debate over Bidens’ historic Child Tax Credit proposal that would cut the child poverty rate by more than 40%.

My focus here is on a perhaps less obvious one but I think relevant: trust fund kids & the tax treatment of inheritances Since the mid-1990s, as I’ll walk through, reducing the taxation of large inheritances has been a top, if not the top, tax policy priority of conservatives and Republicans.

Worried about the child tax credit debate & wishing men read more novels, I urged people to see it through the eyes of a single mom, with a toddler & a 7 yr-old, who works as a cashier

Feeling better now that @crampell and @annielowrey have added their powerful voices Here is this morning must-read from @crampell, including “if getting an extra $250 per month allows a single mom greater choice about whether to work the night shift or spend more time with her second-grader, that’s not obviously a bad thing”
wapo.st/3p4Dd5R