Workers & Economic Inequality

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Is Competition to Attract Businesses Harmful?

Tactics used to generate competition and therefore economic growth are the tax cuts, rebates, and other promises by governments that draw businesses to a specific locale. Some studies have shown, however, that these tactics are only effective in getting businesses to relocate, but fall short in terms of actual financial boosts. TCF fellow Mark Thoma weighs the pros and cons that these types of incentives generate.

Proponents of lower taxes and reduced regulation generally favor this type of competition, while those who worry about the social services government is able to provide and want to maintain regulations that enhance their quality of life are generally opposed.

Read the full article from CBS Moneywatch.

Tags: tax incentives, small business, economic growth

Democrats Help the Middle Class - Why Can’t They Win Elections?

There has been long-time dissension between how Republicans and Democrats view and assist the middle-class. Unfortunately, many of the government benefits that taxes provide are actually portrayed through what TCF fellow Suzanne Mettler calls the "submerged state," and many recipients do not realize their existence.

That is, the way the government actually benefits the middle class often goes unseen, while taxes, particularly the income tax, are very obvious. Mettler notes that our federal tax code is full of handouts like the Mortgage Interest Deduction, but these tax benefits primarily benefit the affluent and middle class. "Our government is integrally intertwined with everyday life from healthcare to housing, but in forms that often elude our vision," she argues.

Mettler's piece is featured in the Huffington Post.

Tags: taxpayers, submerged state, middle-class, gop, democrats

What’s a Fair Tax Rate? It Depends.

All is fair in love and taxes, right? TCF fellow and tax expert Mark Thoma says that tax fairness is a difficult issue to solve when considering income disparities and benefit principles. The progressive tax option would tax each income group at a rate in which each experiences the same amount of financial "pain." Some say the current progressive tax system is not strong enough in the United States.

The implication is that taxes for the wealthy should be increased, and taxes for the poor should be reduced until both sacrifice equally when they pay the last dollar of taxes.

Read Thoma's full article featured in CBS Moneywatch.

Tags: progressive tax, income tax rate, income inequality, equity

Republican Policies Don’t Help People of Color

The approach to appropriate income and wealth distribution has always been at odds between Democrats and Republicans. Republicans seem to deny the existence of racial gaps when it comes to this distribution, whereas Democrats aim to alleviate them. TCF fellow Suzanne Mettler is cited in the Al-Jazeera America article saying that Republicans use items such as "subtle tax breaks and benefits such as marriage subsidies and the mortgage interest deduction," which are part of what she calls the "submerged state" to garner electoral support.

Black income growth stalls when a Democratic president is paired with a Republican Congress. Furthermore, the longer Democrats are in power, the stronger the economic gains for blacks. By contrast, blacks fare worse when Republicans are in office longer. There are similar racial gaps in the criminal justice system.

Read the full article from Al-Jazeera America.

Tags: submerged state, republican party, racial inequality, racial gaps, democratic party

What Does Meaningful Tax Reform Look Like?

TCF fellow Edward Kleinbard was recently featured on Minnesota Public Radio where he spoke with host Kerri Miller. The two spoke about the type of tax reform that can reasonably happen and what it would mean for American individuals and businesses.

Listen to the audio

Read more and listen to Kleinbard's discussion with Miller here.

Tags: tax reform, tax rates, corporate tax

How U.S. Corporations Use Overseas Cash in U.S. Without Paying Taxes

TCF fellow and tax expert Edward Kleinbard is cited in an article that describes the current situation of some prominent companies who have an estimated $2 trillion in cash "trapped" overseas because of U.S. tax laws. It's no secret that companies use corporate loopholes and the high levels of liquidity to maximize their profits and keep their earnings tied up in overseas accounts.

Kleinbard is still a big proponent of corporate tax reform, and he argues in a paper this month it is more feasible politically than many believe. Still, those who expect repatriation of foreign cash (should that reform ever occur) to kick off a wave of corporate spending will likely be disappointed. That is a big reason why companies didn't increase spending when the U.S. had a repatriation "holiday" in 2004, according to Willens.

Check out the full article.

Tags: tax evasion, liquidity, foreign profits, corporate tax loopholes


Workers & Economic Inequality

Workers & Economic Inequality

In recent decades, and especially since 2000, the richest Americans have enjoyed soaring income and wealth while the rest of the population's living standards have stagnated. The Century Foundation was one of the first institutions to raise serious concerns about these trends and propose ideas for improving economic conditions for all Americans- not just the fortunate few.

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