Blog Post by: Andrew Fieldhouse, on January 3, 2013
Viewed through the proper lens of avoiding premature austerity instead of compromising over tax policy for the top 2 percent of earners, Congress predictably failed to adequately moderate the pace of deficit reduction; short of sharply reorienting fiscal policy to accommodate accelerated recovery, U.S. trend economic growth will continue decelerating into 2013—slowing to anemic growth insufficient to keep the labor market just treading water.{{1}} Absent substantial (seemingly remote) additional spending on public investment and transfer payments, the labor market will almost certainly deteriorate this year, regardless of what happens with sequestration and the pending debt ceiling fight.
Blog Post by: Michael Cohen, on December 29, 2012
Presidential campaigns are rarely, if ever, fonts of restrained, nuanced, or comprehensive discussions of foreign policy and national security—but 2012 seemed to reduce this already lowest common denominator conversation . . . even lower.
Blog Post by: Benjamin Landy, on December 21, 2012
In 2002, The Century Foundation convened the Working Group on Tax Expenditures to examine and propose reforms to the tax code. The resulting report, Bad Breaks All Around, identifies twelve tax breaks with little or no economic justification. These "dirty dozen" are no less ripe for the chopping block a decade later, as Congress finally takes up the task of simplifying the tax code. Follow along at Blog of the Century and on the "Dirty Dozen" expenditures homepage as we reintroduce each of the "dirty dozen" and explain why it's long past time to eliminate these costly tax breaks.
For years, the timber industry profited from a number of unusually large tax breaks—including a 60 percent capital gains exclusion for individuals and a special 28 percent corporate capital gains tax rate—before they were eliminated by the 1986 Tax Reform Act. Two significant tax breaks, however, remain: one that allows companies to deduct multi-period timber growing costs, and another that allows certain timber income to be taxed at the lower capital gains rate.
Together, these tax breaks cost the Treasury around $400 million a year in lost revenue, and nearly $4.8 billion in the ten years since The Century Foundation's 2002 report Bad Breaks All Around first recommended eliminating timber subsidies. Absent any convincing reason why taxpayers should continue to support the timber industry, which has enjoyed both strong profits and a growing market capitalization, it is time for these handouts to end.
Blog Post by: Greg Anrig, on December 21, 2012
On Longreads.com, writer Maria Bustillos justifiably praises a “breathtaking debate” on debt relief in Boston Review as one of the best features of 2012. The lead essay in that package by Roosevelt Institute Fellow Mike Konczal lays out a compelling case that the still cavernous overhang of household debt in the aftermath of the housing bubble collapse is the central reason why the economic recovery remains so stubbornly sluggish.
Blog Post by: Mark Thoma, on December 21, 2012
The recovery of output and employment from the Great Recession has been far too slow, in part because of the failure of both monetary and fiscal policy authorities to pursue sufficiently aggressive policies. But there is reason to be hopeful that policy will improve as some of the worst ideas fade, and better ideas take their place.
Blog Post by: Amy Dean, on December 21, 2012
This was a tumultuous year for working people and their families. From the grassroots uprisings last winter to the low-wage workers’ strikes at year’s end, 2012 saw many people coming together for the first time and finding their voices. Below are the items that I would highlight as the best and worst developments of 2012 in the world of labor and progressive social movements.
Blog Post by: Andrew Fieldhouse, on December 21, 2012
With headlines like “Boehner Drops Effort to Avoid ‘Fiscal Cliff’” saturating the Internet today, a little clarification is sorely needed: Speaker of the House John Boehner’s (R-Ohio) so-called “Plan B” may have been many things, but it was certainly not a plan to avoid an austerity-induced recession in 2013—which is what people should be talking about, anyway, when they refer to “avoiding the fiscal cliff.”
Blog Post by: Benjamin Landy, on December 20, 2012
In 2002, The Century Foundation convened the Working Group on Tax Expenditures to examine and propose reforms to the tax code. The resulting report, Bad Breaks All Around, identifies twelve tax breaks with little or no economic justification. These "dirty dozen" are no less ripe for the chopping block a decade later, as Congress finally takes up the task of simplifying the tax code. Follow along at Blog of the Century and on the "Dirty Dozen" expenditures homepage as we reintroduce each of the "dirty dozen" and explain why it's long past time to eliminate these costly tax breaks.
Credit unions in the United States have been exempt from the federal income tax since 1937, following an amendment to the Federal Credit Union Act of 1934, in recognition of their not-for-profit, cooperative status. Although credit unions still pay property, sales and employment tax, some groups (particularly for-profit banks) have challenged this tax-exempt status. The Century Foundation's 2002 Working Group on Tax Expenditures recommended revoking this status a decade ago in order to raise around $1 billion a year in currently foregone revenue.
However, as a general institutional policy, The Century Foundation does support the continued tax exemption for credit unions, which are chartered under a "common bond" that gives each member a share of ownership in proportion to their deposits. These cooperative bonds, along with their not-for-profit corporate structure, lend credence to the idea that credit unions fill an important social role in their communities by providing financial services to otherwise disadvantaged populations. All profits are reinvested or paid back to credit union members, and taxed as dividends.
Blog Post by: Edward D. Kleinbard, on December 20, 2012
In recent years, developments in tax policy, and political economy more generally, have been dominated by two themes: rafts of new technical rules of great import to practitioners or affected taxpayers, but no one else, and legislative paralysis. The past year fits squarely into this modern tradition.
Blog Post by: Andrew Fieldhouse, on December 20, 2012
The best fiscal policy development of 2012 has been the near-universal refutation of the expansionary austerity hypothesis, and a better understanding of the risks of austerity-induced recessions. International evidence and economic research has lent credence to the welcomed realization that, in the United States, expansionary fiscal policy has been largely responsible for propping up anemic growth rates, and that recent pullback of fiscal support has already contributed to decelerating recovery.
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Greg Anrig is vice president of policy and programs who writes on employment and retiree benefits; Social Security solvency and reform; economic security; education; and tax reform.
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