Tax News
Like it or not, taxes are a big part of our lives, so it pays to keep up with the latest tax news. You can find that tax news here.
How Big Are Total Individual Income Tax Expenditures, and Who Benefits from Them? By info@taxpolicycenter.org ( Eric Toder, Leonard E. Burman, Christopher Geissler) |
| Analysts often add up tax expenditures to estimate an aggregate cost, but those tallies are inaccurate because they ignore interactions among provisions. We estimate that interactions raise the cost of nonbusiness tax expenditures by 5 to 8 percent, depending on whether an AMT patch is in effect. In 2007, these tax expenditures totaled about $750 billion5.5 percent of GDP. While tax expenditures benefit taxpayers in all income groups, high-income households gain more relative to income than low-income ones. Although the AMT eliminates some tax preferences, it increases overall tax expenditures because most AMT taxpayers face higher marginal tax rates. |
AMT Coverage by State, 2007 By info@taxpolicycenter.org ( Carol Rosenberg) |
| Many taxpayers must calculate their federal income tax liability under two sets of rules: those applying to the regular income tax and those of the alternative minimum tax. If a taxpayer owes more tax under the alternative rules, then the difference is paid as AMT. The AMT hits people in some states harder than it does in others because state and local income and property taxes are not allowed as itemized deductions against the AMT and because income varies across states. This column discusses AMT participation rates by state. |
The Impact of the Presidential Candidates' Tax Proposals on Effective Marginal Tax Rates By info@taxpolicycenter.org ( Katherine Lim, Jeff Rohaly) |
| A taxpayer's effective marginal tax rate (EMTR) is the percentage of an additional dollar of income that would be paid in federal income tax. An individual's EMTR could affect the decision to work or save more, or avoid income tax. We use the TPC's microsimulation model of the federal tax system to calculate EMTRs under current law and under the presidential candidates' proposals. The Obama plan would lower EMTRs for the majority of households in 2009. Close to 80 percent of the population would see no change in their EMTR under Senator McCain's plan; most others would face lower rates. |
The Individual Alternative Minimum Tax: Historical Data and Projections, Updated October 2009 By info@taxpolicycenter.org ( Katherine Lim, Jeff Rohaly) |
| The alternative minimum tax (AMT), which originally targeted high-income taxpayers, requires annual legislation to prevent it from affecting millions of middle-income individuals each year. There are two primary reasons for the AMTs broadening impact; its parameters are not indexed for inflation and the 2001-2006 tax cuts reduced regular tax liability without changing AMT liability. In 2009, four million taxpayers will pay $33.5 billion in AMT, but without congressional action that number will rise to 27 million owing $102 billion in 2010. This paper describes the AMT and provides TPCs latest estimates of AMT coverage, revenue, and distribution. |
The Opacity of Marginal Tax Rates By info@taxpolicycenter.org ( Rosanne Altshuler, Jacob Goldin) |
| Suppose that a taxpayer earns an additional dollar of income. How much tax would she owe on that dollar? A natural way to answer this question would be to look up the taxpayers statutory tax rate - the tax rate corresponding to her tax bracket and filing status. |