U.S. Budget and Economy

On August 1st, the Tax Policy Center released a study of the Romney tax plan titled "On The Distributional Effects Of Base-Broadening Income Tax Reform" . Following is its conclusion: In this paper we examine the tradeoffs between rates, tax expenditures, and the progressivity of the tax schedules that are inherent in revenue-neutral tax returns. We show that plans that advance steeply lower marginal tax rate structures would require deep cuts in tax expenditures to offset the revenue losses arising from low rates. Because many of the largest tax expenditures benefit middle- and lower-income households, deep reductions tax expenditures can alter the distribution of the tax burden. To illustrate these tradeoffs, we examine as an example a set of tax rate reductions specified in Governor Romney’s tax plan. We show that given the proposed tax rates and proscription against reducing tax expenditures aimed at saving and investment, cutting tax expenditures will result in a net t...

Distribution of Family Net Worth and its Change in the Economic Crisis On June, 11th, the New York Times published a story on the just-released Survey of Consumer Finances (SCF) titled "Family Net Worth Drops to Level of Early ’90s, Fed Says" . The SCF is a cross-sectional survey of U.S. families which has been done every three years since 1989 and includes information on families’ balance sheets, pensions, income, and demographic characteristics. The New York Times story begins: The recent economic crisis left the median American family in 2010 with no more wealth than in the early 1990s, erasing almost two decades of accumulated prosperity, the Federal Reserve said Monday. A hypothetical family richer than half the nation’s families and poorer than the other half had a net worth of $77,300 in 2010, compared with $126,400 in 2007, the Fed said. The crash of housing prices directly accounted for three-quarters of the loss. The tables at this link are taken from the SC...