Urban Institute: Economy/Taxes
Urban Institute reports on: Economy/Taxes - The Urban Institute is a nonprofit nonpartisan policy research and educational organization established to examine the social, economic, and governance problems facing the nation.

• Dire Future for Local Governments If Revenue-Raising Powers Are Not Fixed
  The existence of local governments will be in jeopardy without a significant change in the way they are financed, David Brunori warns in the new edition of his Urban Institute Press book "Local Tax Policy: A Federalist Perspective."
• Have Middle-Income Married Couples Prospered with Age?
  Using data from the Federal Reserve Board's Surveys of Consumer Finances (SCFs), we follow one segment of a cohort over its life cyclemarried couples as the husband ages from 3644 in 1989 to 5159 in 2004. We find that middle-income and lower-middle-income married-couple households experienced modest income growth but rapid growth in net worth. Overall, the evidence documents significant gains in income and wealth as married couples aged from their late 30s to their 50s.
• Revenue and Distributional Effects of the Individual Income and Estate Tax Provisions of Senator Thompson's Plan for Tax Relief and Economic Growth
  Republican Presidential Candidate Fred Thompson has announced a tax plan that combines tax cut extensions, additional tax cuts, and an election to pay tax under a new alternative tax system that would substitute a larger standard deduction for all current deductions and credits and have two rates of 10 and 25 percent. Thompson's plan would reduce federal revenues by $6-7 trillion over ten years, amounting to a reduction of almost 20 percent below current projections, and would be highly regressive. This article describes the proposed changes in the individual income and estate tax and examines their implications for revenue and the distribution of tax burdens.
• High Prices and Demographic Shifts Will Test Metro D.C.'s Ability to House Residents with Special Needs
  Despite the recent housing market slowdown, home prices and rents remain out of reach for many Washington-area residents, especially those with physical and mental disabilities, elderly people who can no longer live independently, and the homeless, a new study by the Urban Institute concludes.
• The Alternative Minimum Tax : Assault on the Middle Class
  In a tax code with no shortage of ironies, the alternative minimum tax (AMT) stands out. Created by Congress in 1969, it was aimed at millionaires, but relatively few millionaires pay it. It is billed as a low-rate levy, but most of its victims face higher taxes because of it. It undermines two widely lauded reforms of the income tax -- restoring both bracket creep and the marriage penalty. And though nobody favors keeping this Frankenstein alive, it will be very difficult to kill. Welcome to the tax policy twilight zone.
• Distributional Effects of the Major Individual Income Tax Provisions of H.R. 3970
  On October 25, 2007, Ways and Means Committee Chairman Charles Rangel (D-NY) unveiled H.R. 3970, The Tax Reduction and Reform Act of 2007, sweeping tax reform legislation that would provide for a revenue-neutral repeal of the individual alternative minimum tax (AMT). This paper describes the proposal and provides distribution tables that analyze the impact of the major individual income tax provisions in the bill.
• What is the Tax Gap?
  In this paper Toder addresses issues related to measurement of the tax gapthe difference between tax liability under the current Federal tax law and taxes paid. He discusses how the tax gap is defined, reviews the main components of the tax gap, and describes how the IRS estimates it, as well as some of the major methodological issues in and weaknesses of current estimates. Toder concludes with some brief observations on the use and potential misuse of tax gap estimates and how compliance data might lead to better tax law administration.
• Tax Code and Health Insurance Coverage : Before the House Committee on the Budget
  In this testimony Burman argues that there are limitations to using tax credits to expand health insurance coverage. A program of health insurance tax credits combined with reforms of the market for nongroup health insurance could significantly expand coverage, but at a very high cost. The testimony summarizes the current tax treatment of health insurance, the effects of tax subsidies on coverage and health care costs, and discusses ways that tax credits might affect health coverage. Burman offers recommendations and adds that the most cost-effective approach to expanding health insurance coverage may not be a tax subsidy at all, but an expansion of an existing public program, such as Medicaid, S-CHIP, or Medicare.
• Can a Child Health Insurance Tax Credit Serve as an Effective Substitute for SCHIP Expansion?
  As the State Children's Health Insurance Program (SCHIP) has come up for reauthorization, the coverage of children with incomes above 200 percent of the federal poverty level (FPL) has become a contentious issue. Proposals have surfaced that would subsidizing the purchase of health insurance for children between 200 and 300 percent of the FPL using tax credits and the private insurance market, as an alternative to allowing states to continue enrolling these children in SCHIP coverage. This analysis compares the family financial burdens of covering children under SCHIP and under a refundable tax credit providing a $1400 per child subsidy.
• The Effects of Welfare and IDA Program Rules on the Asset Holdings of Low-Income Families
  This report examines the effects of a comprehensive set of 13 welfare, Food Stamp, individual development account (IDA), earned income tax credit (EITC), and minimum wage program rules on the asset holdings of low-education single mothers and families. This report finds empirical evidence that more lenient asset limits in means-tested programs and more generous IDA program rules may have positive effects on asset holdings of low-education single mothers and families.
• Assessing Asset Data on Low-Income Households: : Current Availability and Options for Improvement
  This report identifies the most reliable and informative data sources for understanding low-income households assets and liabilities, details their limitations, and provides options for improving asset data sources and collection methods. The report evaluates 12 data sets and identifies three as having the greatest potential for future asset researchthe Survey of Consumer Finances (SCF), the Survey of Income and Program Participation (SIPP), and the Panel Study of Income Dynamics (PSID).
• Broader Issues in Taxing Hedge Fund Managers and Private Equity Partners
  If we're going to have a club whose members pay fairly low individual tax rates, we need to determine who deserves membership on the basis of principles. Few argue that letting hedge fund managers and private equity partners in the club furthers either progressivity or efficiency principles. The one legitimate argument for these club members' special status is simplificationcontinuing to treat all types of income the same among members of partnerships. Hardly convincing at all is the related argument that we shouldn't pick on this particular set of partners when plenty of others (say, individuals who manage their own portfolios) get the same low tax rates.
• The Disappearing Child Care Credit
  There are two primary tax benefits parents use to offset childcare costs. The Child and Dependent Care Tax Credit (CDCTC) provides a tax credit of up to 35 percent on up to $3,000 of expenses per child ($6,000 total), for a maximum credit of $1,050 per child ($2100 total). Or, employees can arrange with their employers to exclude up to $5,000 from their salary to pay for child care. While benefits from the CDCTC swamped those available from the exclusion in 2006; benefits from the child care credit are projected to decline dramatically, largely due to the increase in the number of taxpayers subject to the Alternative Minimum Tax (AMT) beginning in 2008.
• Navigating State and Local Finances
  This article summarizes a March 2007 TPC-Northwestern conference examining state and local finances. Reprinted from Lincoln Institute of Land Policy Land Lines October 2007 issue.
• The iPod: Lightning Rod for Criminals?
  New crime statistics from the FBI show violent crime increased in 2005 and 2006, and an Urban Institute analysis offers evidence that the concurrent explosion in iPod use may have triggered the spike.
• Is There an iCrime Wave?
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