|
Welcome to the Tax History Project, a public service initiative from Tax Analysts. Established in 1995, the Project provides scholars, policymakers, journalists, and the general public with information on the history of U.S. public finance. Please take a look at our features, send us your comments, and sign up for our free newsletter.
- News Analysis: Pop Goes the Soda Tax
So lawmakers are thinking about using a soda tax to help pay for healthcare reform. They should think again. History suggests that soda taxes are not popular. Or fair. Or durable. More generally, they are a poor choice for anyone looking to fund a vital -- and presumably permanent -- social program. Excise taxes are inherently unreliable. They are subject to attack and revision by political opponents, who will lobby long and hard against them. Entitlements need a more resilient fiscal foundation. [Read More] - News Analysis: Reform for Sale, No Money Down
What's with all the down payments?
Every time you turn around, the White House is making a "down payment" of some kind or another -- for healthcare, foreign aid, mass transit, energy independence, you name it.
It's a puzzling metaphor to use in the midst of a mortgage crisis. It's also a confusing one.
On March 5 President Obama described his $634 billion healthcare reserve fund as a "significant down payment that's fully paid for [and] does not add one penny to our deficit." This was real money (in theory, if not legislative reality), gathered from higher Medicare premiums and deduction limitations for well-off taxpayers. But a month earlier, Obama called the economic stimulus bill, replete with unfunded spending, a "down payment on the American Dream that serves our children and our children's children for generations to come." This was money out the door, not cash in the Treasury.
Clearly, the White House has lumped several different concepts under the rubric of a down payment. (The rhetoric flows fast and loose in the Obama administration, but not always coherently.) Some down payments represent new revenue. Others describe new spending or programmatic reform. Still others cover both. [Read More] - Who You Callin' a Tax Cheat?
In the spring of 1937, President Franklin D. Roosevelt launched a public campaign against tax avoidance. It was not his first. After taking office, the president raised the issue repeatedly. Indeed, the revenue acts of both 1935 and 1936 -- the crown jewels of New Deal tax reform -- had both been privately conceived and publicly defended as anti-avoidance measures. But in 1937, Roosevelt decided to take a more direct approach.
During his first term, Roosevelt generally used tax avoidance as a justification for tax innovation. In 1935, for instance, he proposed a new federal inheritance tax to backstop the existing estate levy. In 1936 he argued that a new tax on undistributed corporate profits would bolster the personal income tax, forcing companies to disgorge profits they had previously sheltered from steep individual rates by retaining earnings in corporate coffers.
By contrast, the 1937 anti-avoidance campaign was not designed to build the case for any sort of new levy. Rather, it was a simple and direct attack on popular avoidance techniques, and on the taxpayers who used them. [Read More] - News Analysis: Show Us the Money
In a few days, President Obama will release his tax returns. So will Vice President Joe Biden and a smattering of other politicians around the nation. Willing to sacrifice privacy for the sake of transparency, they will offer us a glimpse into their personal financial lives.
Now what about the rest of us?
[Read More] - News Analysis: What You Can't See Might Hurt You
Middle-income tax increases are the Higgs boson of Obamanomics. For those who skipped that day in Physics for Tax Jocks, the Higgs boson is a subatomic particle whose existence has been predicted by theory but never observed in reality. Scientists are pretty sure it exists, but they can't tell you what it looks like. Obama's tax policy has the same elusive quality. Sure, we know about a few things he wants to do. For everyone in a coma during the past year or so: He wants to raise taxes on the rich. Which is all well and good, especially for an unreconstructed New Dealer like me. But fat-cat tax hikes are not the solution to long-run fiscal problems. More to the point, everyone in Washington knows they aren't the solution. Neither are corporate tax reforms and beefed-up enforcement. All these things will help, but they won't close a fiscal gap that gets bigger every week. [Read More] - News Analysis: A Class Act
Is America a class-blind nation? Conservative critics of the Obama administration seem to think so. "The U.S. has never been a society riven by class resentment," declared New York Times columnist David Brooks in a March 3 op-ed. "Yet the Obama budget is predicated on a class divide." Similarly, in a March 8 article in The Washington Post, Harvard economist N. Gregory Mankiw described Obama's proposed tax increases as a threat to prosperity -- and world peace: "If one citizen of a nation can lay claim to the wealth of his more productive neighbor, shouldn't poor nations have the right to lay claim to the resources of richer nations such as the United States?" Mankiw seems to believe that any sort of redistribution is morally dubious. Perhaps he's arguing for a head tax. But in any case, he too seems to endorse a class-free approach to domestic taxation.
Well, that would be a first. The United States is not class blind -- not today, not yesterday, not ever. And American tax policy has never been class blind, either. The postclass conceit is a romantic misconception, grounded in political expedience and historical myopia. Ironically, whatever meager plausibility it can muster is actually testament to the importance of class in American tax politics, not its absence.
[Read More]
|