Tax Fairness

Housing and Economic Recovery Act of 2008

hmoroz — Fri, 25 Jul 2008 11:21:47 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Percent increase of foreclosure filings from June 2007 to June 2008: 53

Approximate value of mortgages that Fannie Mae and Freddie Mac own or guarantee: $5.2 trillion

Total residential mortgage debt outstanding in the first quarter of 2008: $12.1 trillion

Total outstanding public debt: $9.5 trillion

Percentage of new mortgages Fannie Mae and Freddie Mac currently originate or guarantee, according to Treasury Secretary Henry Paulson: 70

Number of homes that will experience devaluation because of subprime foreclosures that take place nearby: 40.6 million

Average decline in property values for homeowners living near foreclosed properties, in dollars: 5,000

Overview/Summary

Middle Class Position Analysis

Middle Class Supports. As many as 2.5 million families could lose their homes to foreclosure in 2008. At the same time, growing doubts about the solvency of Fannie Mae and Freddie Mac threaten to further destabilize the entire U.S. economy. Congress is not acting a moment too soon..

The refinancing program created by the American Housing Rescue and Foreclosure Prevention Act will have concrete results for middle-class homeowners facing the frightening prospect of foreclosure. Although participation in the program is voluntary for lenders, many are expected to participate and the measure is projected to help approximately 400,000 homeowners. Because the bill forces lenders to write down the principal by at least 10%, the program offers a less generous bailout to mortgage lenders than it otherwise might. Since irresponsible lending is a major cause of the current financial and home equity crisis, the effort to restrict the tax-payer funded bonanza for these lenders is beneficial.

The $4 billion of CDBG funds authorized by the legislation addresses two important problems plaguing aspiring middle-class Americans: the community breakdown that can result from vacant foreclosed homes in neighborhoods across the country and the lack of affordable housing in many communities. Middle-class Americans who are current on their mortgages and face no personal risk of foreclosure are nevertheless harmed when a foreclosed home down the street brings down property values, erodes the local tax base, and threatens to become a magnet for crime. The Center for Responsible Lending has shown that approximately 40.6 million homes will experience devaluation because of nearby subprime foreclosures, that homeowners living near foreclosed properties will lose approximately $5,000 on the value of their homes, and that approximately $200 billion dollars in house values and tax base will be lost from nearby foreclosures. By funneling federal money to local agencies to serve lower- and extremely low-income individuals, the CDBG funds will help neighborhoods recover from the harm done to their communities by foreclosures while helping to ensure that neighborhoods can accommodate aspiring middle-class Americans.

While the Congressional Budget Office believes that there is a 50% or better chance that Treasury will not have to use its new authority to purchase stock in the GSEs, the enactment of this authority reassures markets that the federal government is willing to serve as a backstop if Fannie Mae and Freddie Mac continue to falter. Because these secondary mortgage lenders hold or guarantee approximately half of all mortgages, their failure would have devastating consequences for middle-class families and the American economy as a whole. The promise of a bailout is regrettably necessary to prevent further market destabilization.

Increased oversight of the GSEs will be crucial to ensuring that the government-backed entities minimize taxpayer risk, while making mortgages affordable to middle-class Americans. Standards for a mortgage licensing and registration system and enhanced mortgage disclosure requirements are forward-looking measures that will help prevent the predatory lending and other improper lending practices that contributed to the foreclosure crisis.

Quotes from Experts

Beyond this Bill

Additional Resources

Mortgage Lending, from the Center for Responsible Lending

Housing Policy, from the Center on Budget and Policy Priorities

A Brief History of Fannie Mae and Freddie Mac, from Time

Alternative Minimum Tax Relief Act of 2008

hmoroz — Tue, 08 Jul 2008 19:24:29 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Number of taxpayers subject to the alternative minimum tax in 1970: 20,000

Number of taxpayers projected to be subject to the alternative minimum tax in 2010, absent changes in current law: 33 million

Number of taxpayers subject to the alternative minimum tax in 2007, after Congress passed a temporary alternative minimum tax patch: 4.1 million

Amount of lost revenue by 2018 that would result from repealing the alternative minimum tax, assuming the 2001-2006 tax cuts expire: $960 billion

Percentage of the benefits of repeal that would go to households with income above $100,000 in 2009: 90

Average compensation paid to the 25 individual hedge-fund managers with the highest earnings in 2006: $570,000,000

Approximate loss of revenue to the U.S. Treasury in 2006 alone from taxing the carried interest of these 25 fund managers as capital gains: $1,995,000,000

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. The Alternative Minimum Tax Relief Act ensures that middle-class Americans are not overwhelmed by a tax that they were never intended to pay. An increase in tax payments for more than 25 million American homes – exposing fully 46% of households with incomes between $75,000 and $100,000 to the AMT – would be disastrous for families already reeling from home foreclosures, high gas prices, and nearly stagnant wages. The bill’s revenue-raising tax hikes target the appropriate group: extraordinarily wealthy hedge fund and private equity managers and corporations that have exploited loopholes in the tax code to avoid paying their fair share of taxes.

Quotes from Experts

Beyond this Bill

Additional Resources

Tax Topics: Individual Alternative Minimum Tax (AMT), from the Tax Policy Center

The Taxation of Carried Interest, Testimony before the Finance Committee of the U.S. Senate

"Tax breaks for billionaires," from the Economic Policy Institute

Renewable Energy and Job Creation Act of 2008

hmoroz — Thu, 22 May 2008 17:49:06 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Percentage of the benefits of the child tax credit that went to families in the top 40% of the income distribution in 2005: 60

Maximum percentage of the benefits of the child tax credit that went to families in the lowest 20% of the income distribution in 2005: 1

Estimated number of children that the child tax credit provision in the legislation would benefit: 13 million

Estimated number of children who would become newly eligible for the child tax credit under the legislation: 2.9 million

Estimated industry revenues from renewable energy and efficiency in 2006, in dollars: 970 billion

Estimated lost investment if federal tax credits for solar and wind energy are not extended, in dollars: 19 billion

Estimated jobs in the renewable energy and efficiency industry in 2006: 8.5 million

Estimate number of jobs that could be lost if federal tax credits for solar and wind energy are not extended: 116,000

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. While politicians are proposing short-term band-aids to deal with rising fuel costs, middle-class Americans are increasingly feeling the effects of an energy policy that harms the environment and favors large oil companies. The energy tax credit expansions and extensions in the Renewable Energy and Job Creation Act are part of a long-term strategy to alleviate high fuel costs, make the country more energy efficient, and ensure that the economy retains jobs in renewable energy and technology. Indeed, a recent study demonstrated that failure to extend energy tax credits for solar and wind power could result in the loss of 116,000 jobs. With the middle class already feeling the effects of weak employment, Congress must strengthen a renewable energy and energy efficiency industry that benefits both the environment and the economy.

Aspiring middle-class families with children are in a particularly difficult situation in an economy of high food, fuel, and health care costs. The Renewable Energy and Job Creation Act’s changes to the child tax credit would make 2.9 million additional children eligible for the benefit and would increase the benefit for 10.1 million more. Expanding the income floor for the credit means that very low-income aspiring middle-class families, who currently benefit less from the credit than higher-income families, will receive the support they need to make ends meet.

The revenue raising provisions of the Renewable Energy and Job Creation Act not only make the legislation fiscally responsible, but make the tax code fairer by eliminating loopholes exploited wealthy executives and multinational corporations.

Quotes from Experts

Beyond this Bill

Additional Resources

“Greener Pathways: Jobs and Workforce Development in the Clean Energy Economy”, from the Apollo Alliance

“Taxation and the Family: What is the child tax credit?” from the Tax Policy Center

“Families Helped by the Child Tax Credit Expansion Work Hard in Low-Paying Jobs” from the Center for Budget and Policy Priorities

Amendment to the Military Construction and Veterans Affairs and Related Agencies Appropriations Act of 2008

hmoroz — Fri, 16 May 2008 18:23:04 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Approximate total award that service members can currently receive toward their education, in dollars: 39,600

Average total charges, including tuition and fees and room and board, for four years at an in-state public college or university in 2007, in dollars: 54,356

Estimated percentage of the unemployed who will be unemployed for longer than six months by the end of 2009, according to the Economic Policy Institute: 20.8

Number of states with an unemployment rate greater than 6.0% as of April 2008, including Washington D.C.: 5

Amount of stimulus produced for every $1 spent on extending emergency federal unemployment insurance benefits, in dollars: 1.64

Unemployment rate in Michigan in April 2008: 6.9%

Minimum estimated cost of the Iraq War paid by Michigan as of May 2008, in dollars: 13 billion

Estimated 10-year cost of extending unemployment insurance benefits, in dollars: 11.1 billion

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. The American economy remains at risk of recession and the employment picture is dim. In the first four months of 2008, the American economy lost 260,000 jobs and 400,000 workers were classified as “discouraged,” wanting work but believing that no jobs were available for them. Unemployment benefits provide direct assistance to the current and aspiring middle-class Americans likely to be hardest hit during the economic downturn. Moreover, the unemployed are most likely to spend their unemployment benefits immediately, providing an economic jolt that will enhance the stimulus generated by the tax rebates sent out earlier this year. Indeed, extension of unemployment benefits provides $1.64 in stimulus for every dollar spent, making the policy one of the most effective stimulus measures.

The “New GI Bill” measures are also important. Our nation owes those young people who have volunteered to fight for the United States a fair opportunity to enter the middle class. After World War II, the education and other benefits of the GI Bill allowed unprecedented numbers of returning soldiers to access a middle-class standard of living, but today’s GI Bill, intended for peacetime, does not provide adequate benefits. This amendment would change that. Veterans of the Iraq and Afghanistan Wars face not only the challenges of readjustment to civilian life, frequently complicated by injury or mental illness, but the rising cost of higher education impacting middle-class Americans across the United States. The current GI bill covers only 60-70% of the cost of tuition at a four-year public university and less than two years at a private college. The Amendment to the supplemental appropriations bill would permit the equivalent of full scholarships to public institutions of higher learning to any service member who completed three years of service.

Imposing a moratorium on Administration-proposed Medicaid regulations will ensure continued health care access for aspiring middle-class beneficiaries and prevent a devastating loss of funding to states, public hospitals, and local schools already struggling during the economic downturn.

The provisions that increase accountability and transparency in federal contracting are welcome, but are not as comprehensive as those included in the Accountability in Contracting Act, passed by the House last year.

The Senate version contains welcome funding for programs that benefit aspiring middle-class and middle-class Americans.

Quotes from Experts

Beyond this Bill

Additional Resources

"Making the Case - Again - for Economic Rebound," from the Economic Policy Institute

Unemployment Insurance and the Stimulus Debate, from the Center for Budget and Policy Priorities

"A New GI Bill," from the Iraq and Afghanistan Veterans of America

Amendment To Avoid Subjecting Thousands of Families, Family Businesses, and Family Farms and Ranches to the Estate Tax of 2008

hmoroz — Fri, 21 Mar 2008 15:26:43 -0400

Legislation

The middle class

Opposes

Video Summary

Injustice Facts

Maximum value of estate exempt from the estate tax in 2001, in dollars: 675,000

Top estate tax rate in 2001: 60

Maximum value of estate exempted by the Salazar Amendment, in dollars: 5,000,000

Top estate tax rate mandated by the Salazar Amendment: 35%

Top estate tax rate in 2009 if the Salazar Amendment is not enacted: 45%

Percentage of estate tax revenue that will come from the top 10% of the income distribution in 2007: 90

Amount of revenue that the estate tax will raise from the 14,000 estates subject to the tax in 2007: $19 billion

The effective tax rate – calculated based on the share of an estate actually paid in tax – that results from a 35% statutory estate tax rate with a $3.5 million per person exemption: 14%

Income and payroll tax rate for a family of four with an income of $60,000: 18%

Overview/Summary

Middle Class Position Analysis

Middle Class Opposes. Although the Salazar Estate Tax Amendment is revenue-neutral, and so will not increase the budget deficit, estate tax revision that significantly decreases the tax rate and increases the exemption still adversely affects the middle class. The estate tax applies only to Americans lucky enough to inherit substantial fortunes – approximately .5% of deaths result in taxable estates – and the amendment’s changes to the estate tax in 2009 would benefit only 3 of every 1,000 estates worth millions of dollars. The tax preserves the American tradition of rewarding hard work, not inherited privilege and wealth. The revenue neutrality of the amendment could require spending reductions for already underfunded federal programs that benefit the middle class or will oblige those who work for their money to pick up a bigger share of the tax bill while allowing accumulated wealth to be passed on for generations.

Quotes from Experts

Beyond this Bill

Additional Resources

The Estate Tax: Myths and Realities, from the Center on Budget and Policy Priorities

Testimony of Lily L. Batchelder, Associate Professor of Law & Public Policy, Before the Senate Finance Committee

Estate and Gift Taxes Background Documents, from the Tax Policy Center

Amendment To Protect Small Businesses, Family Ranches, and Farms from the Death Tax of 2008

hmoroz — Fri, 21 Mar 2008 14:47:43 -0400

Legislation

The middle class

Opposes

Video Summary

Injustice Facts

Maximum value of an estate exempt from the estate tax in 2001, in dollars: 675,000

Top estate tax rate in 2001: 60%

Maximum value of an estate exempted by the Kyl Amendment, in dollars: 5,000,000

Top estate tax rate mandated by the Kyl Amendment: 35%

Percentage of tax benefit enjoyed by estates valued at more than $10 million if the Kyl Amendment is enacted: 63

Percentage of tax benefit enjoyed by estates valued at less than $3.5 million per person if the Kyl Amendment is enacted: 0

Approximate cost of the Kyl Amendment between 2012 and 2021, in dollars: 770 billion

Overview/Summary

Middle Class Position Analysis

Middle Class Opposes. The estate tax applies only to Americans lucky enough to inherit substantial fortunes. In fact, approximately .5% of deaths result in taxable estates. In this way, the tax preserves the American tradition of rewarding hard work, not inherited privilege and wealth. Although the Kyl Amendment does not fully repeal the estate tax, as has been proposed in the past, the legislation would still cost approximately 77% of the $1 trillion cost of permanent repeal between 2012 and 2021. This significant reduction in revenue would benefit only the wealthiest 3 of every 1,000 American estates worth millions of dollars. The Kyl Amendment would adversely affect aspiring middle-class and middle-class Americans by burdening them with more of the cost of public services while allowing accumulated wealth to be passed on for generations. Those who work for their money would be forced either to pick up a bigger share of the tax bill or to suffer cuts in services essential to middle-class families and communities.

Quotes from Experts

Beyond this Bill

Additional Resources

Kyl Estate Tax Amendment Would Cost Nearly as Much as Estate Tax Repeal, from the Center on Budget and Policy Priorities

State-by-State Data on the Estate Tax, from Citizens for Tax Justice

Testimony of Warren Buffet, Before the Senate Finance Committee

Recovery Rebates and Economic Stimulus for the American People Act of 2008

atraub — Wed, 30 Jan 2008 16:06:08 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Amount of stimulus produced for every $1 in tax cuts targeted to low-income households: $1.19

Amount of stimulus produced for every $1 in tax cuts provided through a business investment write off policy: $0.24

Amount of stimulus produced for every $1 spent on extending emergency federal unemployment insurance benefits: $1.73

Amount of stimulus produced for every $1 spent on state government aid: $1.24

Minimum amount of revenue states are projected to lose as a result of the investment incentives, according to the Center for Budget and Policy Priorities: $4 billion

Percentage of businesses in a 2006 survey that said that bonus depreciation, a type of investment incentive implemented in the past, was an important factor in their decisions about investment level or timing: 10

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. There is increasing evidence that the economy faces a high risk of recession which could throw millions of middle-class Americans out of work, reduce income and health insurance coverage, and increase poverty. A smart economic stimulus plan could prevent the downturn or soften its effects, but not just any stimulus package will do. To be effective, an economic stimulus package must direct money to those who will spend it quickly, boosting consumer demand and prompting increased production and economic growth. For this reason, the household tax rebates are likely to be effective, if the checks can be sent quickly. It is particularly significant that the rebates are targeted to cash-strapped middle-class and aspiring middle-class Americans, who are more likely than wealthier people to spend the money they receive immediately, rather than saving it. It is also important that Americans relying on Social Security or disability benefits be included, both as an issue of basic fairness and because these groups are likely to spend their rebates quickly.

The increases in FHA, Freddie Mac, and Fannie Mae mortgage limits are also helpful because they help these entities keep up with the current housing market. By buying and insuring loans, the FHA, Freddie Mac and Fannie Mae create viable refinance options for middle-class Americans who have been targeted by predatory loan practices and would otherwise be trapped in unaffordable adjustable rate mortgages and other abusive loan products.

The business tax cuts, a product of negotiation between the Bush Administration and Congress, are less positive for the middle class because they provide little simulative effect but would deprive the public of significant revenue and increase deficits. Offering tax incentives for business investment frequently fails to generate substantial economic growth because many businesses use the tax cuts for investments they already planned to undertake anyway, costing the public lost revenue but creating no additional economic activity. Another drawback is that it takes considerable time for businesses to make new investments and for investments to result in increased employment or purchasing. Yet to be most effective economic stimulus should have a rapid impact on the economy. Finally, the Center on Budget and Policy Priorities points out that business incentives harm state budgets, since state and federal tax codes are linked. Many states are already facing a revenue crunch due to the economic downturn and, unlike the federal government, they cannot run budget deficits. The result could be cuts in state and local services that middle-class Americans rely on, from education to road maintenance to public safety.

Quotes from Experts

Beyond this Bill

Additional Resources

“Strategy for Economic Rebound: Smart Stimulus to Counteract and Economic Slowdown,” from the Economic Policy Institute

“Options for Responding to Short-Term Economic Weakness,” from the Congressional Budget Office

“Assessing President Bush’s Fiscal Policies,” from Economy.com

Tax Reduction and Reform Act of 2007

atraub — Tue, 08 Jan 2008 10:57:09 -0500

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Quotes from Experts

Beyond this Bill

Additional Resources

Temporary Tax Relief Act of 2007

hmoroz — Tue, 11 Dec 2007 11:47:23 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Number of taxpayers affected by the AMT in 2006, with the exemption that is extended in this legislation: 3.5 million

Number of taxpayers who will be affected by the AMT in 2007 if this legislation is not enacted into law: 23.4 million

Average compensation paid to the 25 individual hedge-fund managers with the highest earnings in 2006: $570,000,000

Approximate loss of revenue to the U.S. Treasury in 2006 alone from taxing the carried interest of these 25 fund managers as capital gains: $1,995,000,000

Amount that the IRS estimates it will spend in startup and ongoing maintenance costs through FY2007 for the private collection agency program: $71 million

Revenue the IRS estimates it would generate if it applied this $71 million to its own IRS Automated Collection System: $1.4 billion

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. The Temporary Tax Relief Act of 2007 ensures that middle-class Americans are not overwhelmed by a tax that they were never intended to pay. An increase of approximately $3,000 in tax payments for more than 20 million American homes would be disastrous for families already reeling from home foreclosures, high gas prices, and nearly stagnant wages. The bill’s tax credit increases and extensions, including credits for college tuition and for improving public schools in economically distressed areas, benefit current and aspiring middle-class families. The legislation also spares families who have lost their homes to foreclosure from large income tax bills that would result from their mortgage debts being voided. This provision provides relief for households engulfed by the housing crisis that would otherwise be subject to large tax bills even after losing their homes. The bill’s revenue-raising tax hikes target the appropriate group: extraordinarily wealthy hedge fund and private equity managers who have exploited loopholes in the tax code to avoid paying their fair share of taxes.

Finally, the Tax Relief Act’s prohibition of debt-collection contracts between the IRS and private companies, a ban suggested by the IRS’s taxpayer advocate, will put a stop to the harassment of lower- and middle-income taxpayers that resulted from the unaccountable, inefficient, and expensive outsourcing of a public function to the private sector.

Quotes from Experts

Beyond this Bill

Additional Resources

House AMT “Patch” Bill Is Fiscally Responsible from the Center on Budget and Policy Priorities

Tax Topics: Individual Alternative Minimum Tax from the Urban-Brookings Tax Policy Center

The Taxation of Carried Interest, Testimony before the Finance Committee of the U.S. Senate

Nina Olson, National Taxpayer Advocate, Statement on the IRS’s private debt collection inititative

Tax Fairness

Housing and Economic Recovery Act of 2008

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Alternative Minimum Tax Relief Act of 2008

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Renewable Energy and Job Creation Act of 2008

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Amendment to the Military Construction and Veterans Affairs and Related Agencies Appropriations Act of 2008

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Amendment To Avoid Subjecting Thousands of Families, Family Businesses, and Family Farms and Ranches to the Estate Tax of 2008

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Amendment To Protect Small Businesses, Family Ranches, and Farms from the Death Tax of 2008

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Recovery Rebates and Economic Stimulus for the American People Act of 2008