John Irons's Blog


Economic News, Data and Analysis

Thomas on Corp tax Reform

Interesting… Thomas is always good for an unusual (and often accurate) perspective.
Ways and Means Chairman Tells Corporate Tax Lobbyists That They ‘Blew It’
By Rachel Van Dongen, CQ Staff
Assailing business lobbyists for focusing on the wrong goals, House Ways and Means Chairman Bill Thomas said Monday that they missed their best chance for meaningful corporate tax reform.
In a speech to the Tax Executives Institute at its midyear meeting in Washington, the California Republican lambasted those who lobbied for narrowly targeted provisions in the 2004 corporate tax overhaul bill (PL 108-357).
“One of the things I want to talk about today is how you blew it,” the chairman said in his characteristically blunt manner.
Thomas, who is retiring this year after 28 years in the House, contended that tax lobbyists were too concerned with the narrow interests of a single company instead of the broader needs of corporate America.
“It’s still a decent bill, but nowhere near what it should have been,” the chairman said, referring to the 2004 overhaul.
“As the window closes on 2006 . . . major corporate tax reform will not be on the front burner,” he warned. “It was on the front burner, it’s not now and it probably won’t be in the future. Tax accounting won out over tax reform.”

Filed under: Uncategorized

IRS audit data

Only 30 out of more than 180,000 Millionaires Faced Traditional IRS Audits Last Year
Audit Rates for Low Income Taxpayers Greater than for Top Earners
IRS Says Release of Statistics that Might Explain Aberration “Would Adversely Affect Tax Administration”
Syracuse, March 28 — According to new data from the Internal Revenue Service only 30 of the nation’s thousands of millionaires were subject to a face-to-face IRS audit in 2005. The very small number selected for the traditional and sometimes intensive audits were drawn from 184,054 individual tax returns reporting a total positive income of $1 million or more.
Analysis of IRS data by the Transactional Records Access Clearinghouse (TRAC) further indicates that the audit rate for America’s wealthiest taxpayers is substantially lower than for the poorest. See Figure 1 and supporting table.

Filed under: Economics

Conference: Options for Tax Reform

Our Events – Center for American Progress
Options for Tax Reform
Friday, March 24, 2006
Center for American Progress
8:30 A.M to 3:30 P.M.
A full-day conference with academic and policy experts from around the country who will highlight options for reforming the tax code. Many experts agree that the tax code is in need of repair. Yet it has been 20 years since the landmark 1986 reform. Given the growing complexity of the tax code, increased revenue pressures, and a changing economy; tax reform will likely be a central issue for 2006 and beyond. The conference will provide a forum for sharing proposals-both quick fixes and broad overhaul-and for open and engaged discussion.
Click here to RSVP
or call 202-741-6246
Introduction and Welcoming Remarks
Time: 9:00 A.M.
John Irons, Director of Tax and Budget Policy, Center for American Progress
Panel I: Comprehensive Reform
Time: 9:05 A.M.- 10:45 A.M.
The Honorable Chaka Fattah, U.S. Representative, Second Congressional District, Pennsylvania
John Irons, Director of Tax and Budget Policy, Center for American Progress
Maya MacGuineas, Director, Fiscal Policy Program, The New America Foundation
Van Doorn Oooms, Senior Fellow, Committee for Economic Development
Paul Weinstein Jr., Chief Operating Officer, Progressive Policy Institute
William Gale, Arjay and Frances Fearing Miller Chair in Federal Economic Policy and Deputy Director of Economic, Brookings Institution
Panel II: Education and Marriage
Time: 10:45 A.M. – 11:45 A.M.
Susan M. Dynarski, Associate Professor of Public Policy, Harvard University and Faculty Research Fellow, NBER
Jeffrey Liebman, Professor of Public Policy, Harvard’s Kennedy School of Government
Alan J. Auerbach, Director, Robert D. Burch Center for Tax Policy and Public Finance, University of California, Berkeley
Austan Goolsbee, Robert P. Gwinn Professor of Economics, University of Chicago, Graduate School of Business
Luncheon Panel: Future of Tax Reform – Overhaul or Incremental Change?
Time: 12:00 P.M.- 1:45 P.M.
Elizabeth Garrett, Vice Provost of Academic Affairs, University of Southern California and Member, President Bush’s Advisory Panel on Federal Tax Reform
Peter R. Orszag, Senior Fellow, Brookings Institution
Gene B. Sperling, Senior Fellow, Center for American Progress
Jon Talisman, Founding Partner of Capitol Tax Partners
Moderated by:
John Podesta, President and Chief Executive Officer, Center for American Progress
Panel III: Rewarding and Encouraging Work, Supporting Parents, International Taxation
Time: 1:45 P.M. – 3:15 P.M.
Anne Alstott, Jacquin D. Bierman Professor of Taxation, Yale Law School
Jason Furman, Senior Fellow, Center on Budget and Policy Priorities and Visiting Scholar at New York University’s Wagner School
James Kvaal, Harvard University
Jonathan Gruber, Professor of Economics, Massachusetts Institute of Technology
Daniel Halperin, Stanley S. Surrey Professor, Harvard Law School
Robert Gordon, Senior Vice President for Economic Policy, Center for American Progress
Closing Comments
Time: 3:15 P.M. – 3:20 P.M.
Panelists Biographies
Program: 9:00 AM – 3:30 PM
Breakfast will be served at 8:30 A.M.
Lunch will be served at 11:45 A.M.
Admission is free.
Center for American Progress
1333 H Street NW, 10th Floor
Washington, DC 20005
Maps and Directions
Nearest Metro: Blue/Orange Line to McPherson Square or Red Line to Metro Center

Filed under: Economics

Krugman/Wells on Health Care


The New York Review of Books: The Health Care Crisis and What to Do About It
The good news is that we know more about the economics of health care than we did when Clinton tried and failed to remake the system. There’s now a large body of evidence on what works and what doesn’t work in health care, and it’s not hard to see how to make dramatic improvements in US practice. As we’ll see, the evidence clearly shows that the key problem with the US health care system is its fragmentation. A history of failed attempts to introduce universal health insurance has left us with a system in which the government pays directly or indirectly for more than half of the nation’s health care, but the actual delivery both of insurance and of care is undertaken by a crazy quilt of private insurers, for-profit hospitals, and other players who add cost without adding value. A Canadian-style single-payer system, in which the government directly provides insurance, would almost surely be both cheaper and more effective than what we now have. And we could do even better if we learned from “integrated” systems, like the Veterans Administration, that directly provide some health care as well as medical insurance.

Filed under: Economics

Krugman on inequality

Krugman informally muses about income inequality… (via delong).

A Few Notes on Income Inequality – Krugman – NYT Web Journal
A Few Notes on Income Inequality
I’ve written a couple of columns recently focusing on growing income inequality, and intend to write more. Until then, however, I thought readers might find a few further notes on the subject useful.

Filed under: Economics

SIPP ended in Bush’s budget

The President’s FY2007 budget calls for the elimination of the Survey of Income and Program Participation (SIPP), effective September 2006.
Save SIPP!
Download the original letter from researchers sent to Congress on March 2, 2006, with signatures
* Organized by last name
* Organized by state
Sign a Letter for Organizations and Advocacy Groups
Sign a Letter for Individual Researchers
SIPP Basics
The SIPP is the only large-scale survey explicitly designed to analyze the impact of a wide variety of government programs on the well-being of American families. As a longitudinal survey that tracks the same families over time, it provides researchers with unique information on the extent to which programs like Temporary Assistance for Needy Families (TANF), Medicaid, Social Security, and unemployment insurance are successful in meeting families’ basic needs and promoting upward mobility. It also tracks health insurance coverage, and provides more in-depth information than other government survey on work-family issues, such as maternity leave, child care, and child support.
The Census Bureau first fielded the SIPP in 1984, after over six years of careful design and testing. Since then, the Census Bureau and social-science researchers have gained extensive experience with the survey and worked together to refine and improve it. The SIPP has served as the basis for thousands of academic papers and government and independent policy reports on poverty, income mobility, and the effectiveness of state and federal government programs. Over the last quarter century, hundreds of millions of public and private dollars have been invested in the development of the SIPP and the capacity to analyze its data. This investment will be lost if the SIPP is eliminated.
The total cost of the SIPP is about $40 million per year, yet it provides a constant stream of in-depth data that enables government, academic, and independent researchers to evaluate the effectiveness and improve the efficiency of several hundred billion dollars in spending on social programs.

Filed under: Economics

What Bush Boom?

Mirrored from BudgetBlog…

The conservative Bruce Bartlett echos a point Lee Price (from EPI) and I made in our report “Bush’s Tax and Budget Policies Fail to Promote Economic Growth.

Bruce Bartlett – The Right Stuff – What Bush Boom? – New York Times Blog
What Bush Boom?
Categories: George Bush, Taxes

One of the main criticisms I have received from friends on the right about my new book, “Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy,” is that it ignores an important point — that Mr. Bush’s tax cuts have been so good that they in effect compensate for or excuse his huge increases in spending and other anti-free market policies.

When I ask what was so great about the tax cuts, they point to the “booming” economy. I have yet to hear any other evidence offered.

Thus we see that real G.D.P. is very slightly higher, but all the other numbers are substantially worse in this expansion compared to the last one. And it is worth remembering that taxes were not cut at all during that business cycle but were, in fact, raised twice. George H.W. Bush raised taxes as part of the 1990 budget deal and Bill Clinton raised taxes substantially in 1993, shortly after taking office. The hallmark of both tax increases was an increase in the top tax rate — considered anathema by supply-side economists — which went from 28 percent at the end of the Reagan administration to 39.6 percent during the Clinton years.

Therefore, I do not see how President Bush’s tax cuts can be given any credit for the “booming” economy. All we have seen is the upturn we get after every recession. In other words, without any tax cuts at all, we would be pretty much in the same place economically. The burden of proof is on those who say otherwise and cannot merely be asserted, as my supply-side friends do.

Filed under: Economics

IRS Outsourcing Debt Collection

This seems like it could have the potential for a very bad outcome… (Anyone want to take bets for when taxpayer information is first misused?).
The argument for doing this is that it might be cheaper to collect unpaid taxes through a private company. But since the IRS will have to do quite a bit of oversight – it seems like there would be a lot of wasted resources dealing with all the issues that might arise. (E.g. what’s to prevent these companies from targeting specific groups?)
This seems like a core function of the IRS, and it should be done in-house, not farmed out. | IRS Awards First Debt Collection Contracts
� 2006 The Associated Press
WASHINGTON — The nation’s tax collectors announced Thursday that three companies will help collect unpaid tax debts.
The firms, chosen from 33 applicants, will help the Internal Revenue Service collect money from taxpayers who agree they owe taxes but haven’t paid. As much as $7.7 billion in unpaid taxes could be eligible for assignment to a private debt collector, debts the IRS does not have the resources to collect itself.
Congress in 2004 gave the IRS authority to contract debt collection to private companies. The tax agency plans to expand the limited trial, which will be under way this summer, to as many as 10 companies in 2008.
Concerns about taxpayer privacy have been expressed by some lawmakers, consumer advocates and the labor union that represents IRS employees.
The companies can track down taxpayers to request payment. If the debt cannot be paid in full, the company can set up a payment schedule up to 5 years long. Taxpayers would submit the money to the IRS. The law allows debt collectors to be paid as much as 25 percent of the taxes collected.
The firms are The CBE Group Inc., in Waterloo, Iowa; Linebarger Goggan Blair & Sampson LLP in Austin, Texas; and Pioneer Credit Recovery Inc. in Arcade, N.Y.

Filed under: Economics

Patent System Reform

I think I am coming to the conclusion that the US patent systems, as currently constructed, is harming innovation.
The Blackberry case (see below) illustrates one way that patents law is more about money than about protecting inventors’ rights or about dynamic economic efficiency. (The same might be said about copyright as well).
I don’t know the ultimate solution, but I think it is time to take a another look. In particular, we need to address the problem of how to preserve incentives to innovate while also benefiting consumers and the broader economy. Right now, the balance is too much shifted in favor of preserving monopoly rents for businesses, and the system has largely forgotton that the goal of patent (and copyright) protection is to increase the amount new techonolgy in the hands of consumers.
As the blackberry case shows, over aggressive patent protection can also dampen inventives to innovate and market new technologies.

Levy: The BlackBerry Deal Is Patently Absurd – Newsweek Technology –
March 13, 2006 issue – What is the value of a bunch of discredited patents? We found out last week when Research in Motion (RIM), the company that makes the beloved BlackBerry, paid a company called NTP $612.5 million to settle a claim that it infringed on patents NTP was granted in 1991. That’s a lot of money to pay for any technology, but if NTP really invented the magic that made the BlackBerry so addictive, it was certainly entitled to a big payout. It’s doubtful, though, that NTP had any hand in that magic—because when the U.S. Patent and Trademark Office re-examined the patents in question, it found evidence to reject them.

Filed under: Economics

Good Advice

Let me echo the advice of Rubin/Thoma/DeLong…

Brad DeLong’s Semi-Daily Journal
Economist’s View
Mark Thoma transmits some good advice from Robert Rubin:

Economist’s View: Robert Rubin urges Democrats to define the nation’s fiscal problems broadly and not to fall into the trap of focusing solely on Social Security and Medicaid in formulating a solution:

Rubin Urges Democrats to Reject Bush Social Security Proposal, Bloomberg: Former U.S. Treasury Secretary Robert Rubin urged fellow Democrats to reject President George W. Bush’s plan for a bipartisan commission to examine solutions to the mounting costs of Social Security and health care. Rubin… said Democratic leaders in Congress should instead insist Bush join them in a “fiscal commission” to discuss all options for cutting the budget deficit, including rolling back Bush’s tax cuts. “It only makes sense substantively, in my judgment, to get together around this if everything is on the table, including the tax cuts,” Rubin … said… “Otherwise you have a one-sided approach to what is a very large problem.”…

Rubin is–as he almost invariably is–right. We don’t need an Entitlements Commission, we need a Fiscal Commission

Filed under: Background