If at first you don't succeed, try, try, again.(Read article summary)
Tax plans, state budgets, and marriage bonuses. These briefs will help keep you up to date on what to watch in the following days.
Alabama’s budget: Is the third time the charm? The state’s legislature began its second special session of the year last night, and will try for the third time to pass a budget. Alabama’s general fund faces a $200 million shortfall next year and GOP Governor Robert Bentley has proposed $260 million in tax increases to close it. But the legislature twice rejected them. Now, he wants to eliminate the state income tax deduction for FICA payroll taxes, and raise the state’s cigarette tax and the business privilege tax. Some state state lawmakers may offer a lottery instead.
Back at Brookings: Peter Orszag. After heading the Congressional Budget Office and the Office of Management and Budget, Orszag has returned to the Brookings Institution economic studies program as a nonresident senior fellow. During his first stint at Brookings, Orszag was the deputy director of economic studies and ran The Hamilton Project. He also directed the Retirement Security Project and was a co-director of the Urban-Brookings Tax Policy Center.
The tax plans are coming! The tax plans are coming! GOP candidate Jeb Bush releases his today, and Ben Carson’s top economic adviser, George Mason University professor Thomas Rustici, is touting a complete tax overhaul (though it’s not clear if Carson will sign on). No details on Donald Trump’s plan yet, but Marco Rubio thinks Trump should run as a Democrat. Given all the upcoming plans, Bloomberg shows how analyses of them mightcompare. Said TPC’s Eric Toder, “There’s a whole lot of assumptions about behavior that you have to make” in any model. “It’s not just a matter of simple mechanics of savings and investment… It’s important to exercise extreme caution so that people don’t think we’re trying to play favorites or play sides, because we’re not.”
It’s Must-See-TV season again… Assuming you follow tax news amid presidential politics, of course. TPC’s Howard Gleckman highlights five key tax stories to watch this fall: international tax reform; the Highway Trust Fund, the tax extenders; presidential tax plans (see above); and the IRS budget. “Keep in mind,” he concludes, “all of this will happen in what is likely to be an increasingly toxic fiscal environment.” Will we have another government shut down? Will tax policy get the attention it deserves? Stay tuned…
Living together with kids: Does it pay to get married? Tax wise, it depends on your earnings. A new TPC paper by Elaine Maag and Greg Acs examines the size of marriage penalties and bonuses that low- and moderate-income cohabiting couples with children would face if they got hitched. Elaine and Greg find that federal tax laws can create marriage penalties that reach almost 10 percent of earnings for couples earning $40,000 or $50,000 a year. But a couple earning $20,000 a year could receive a marriage bonus in excess of 10 percent of earnings.