The plan to extend and expand the 199A deduction for businesses makes for bad economics. My new blog with @samthorpe.bsky.social explains why.
22.05.2025 17:59
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The plan to extend and expand the 199A deduction for businesses makes for bad economics. My new blog with @samthorpe.bsky.social explains why.
New post out in @contrariannews.org on Trump's misguided and potentially destructive tariffs.
Even without extending TCJA, keeping debt/GDP at its 2024 level (98%) in 2055 would require permanent spending cuts or tax increases of 1.84% of GDP if started in 2026—about $530 billion, or 22% of 2024 income tax revenues, or 15% of spending other than Social Security, Medicare, and interest.
In the latest budget update, Alan Auerbach and I show that the fiscal outlook remains grim.
Under current law, debt will reach 154% of GDP by 2055.
Under current policy, which assumes that TCJA is made permanent, debt reaches 209% of GDP.
www.brookings.edu/articles/the...
New working paper:
The U.S. income tax may be race-neutral on paper, but its effects aren’t. Our new paper shows how white, Black, and Hispanic families face different burdens, especially when considering untaxed income.
Read more: www.brookings.edu/articles/the...
1.2% of GDP.
That's how much extending TCJA will cost each year. It's also how much would it take to close the Social Security funding gap for 75 years or longer.
Congress could save Social Security, and avoiding a regressive tax cut would make it possible.
www.brookings.edu/articles/cut...
The gutting of the estate tax has been costly. If the 2001 rules were still in place (indexed for inflation), it would've raised $145B in 2021—seven times more than the actual $18B collected.
www.brookings.edu/articles/tax...
Our analysis shows a 37% inheritance tax with a $2.81M exemption would raise the same revenue as the current estate tax—but more progressively. It would also broaden the tax base and boost mobility. 2/2
As we face the largest intergenerational wealth transfer in US history, converting the federal estate tax (taxing what people leave) to an inheritance tax (taxing what people receive) could be a win-win. 1/2
www.brookings.edu/articles/fol...
As DOGE continues its blitz across Washington, it's missing a major opportunity: tax expenditures.
Reforming these hidden subsidies in the tax code, which cost roughly $1.5T annually, could reduce deficits, increase progressivity, and simplify the code.
www.brookings.edu/articles/a-b...
Trump is in LV promoting no taxes on tips. Exempting tips from taxes does nothing to help most low-income workers, and it may do little for many tipped workers—or even harm them as @billgale.bsky.social & Ian Berlin of @brookings.edu discuss in @econofact.bsky.social econofact.org/tip-off-the-...
One of the main justifications for the TCJA was boosting investment. But did it achieve this goal?
Recent research shows that the impact on overall investment was small, meaning that lawmakers could raise rates and increase revenue with little economic downside.
www.brookings.edu/articles/how...
EI includes estimates of annualized unrealized capital gains, imputed owner-occupied housing income, unreported business income, inheritances received, Medicare, Medicaid, and more. We are using EI in several new papers, including on taxing the Great Wealth Transfer www.brookings.edu/articles/how...
Here's one for the wonks: in a new paper with @johnsabelhaus.bsky.social, we introduce a new measure of income for distributional analyses, Expanded Income.
www.brookings.edu/articles/exp...
In a new paper and policy brief, we analyze the upcoming Great Wealth Transfer and explore several options for tax reform. We show that converting the estate tax to an inheritance tax, as well as taxing unrealized capital gains at death, can improve progressivity and raise significant revenue.
In a new Tax Notes paper, Kyle and I look at how taxes on the affluent affect six key economic distortions and how various proposals for reform could improve these distortions.
The full paper is now available, plus a related blog: www.brookings.edu/articles/are...
Screenshot of title, "Sweeping Changes and an Uncertain Legacy: The Tax Cuts and Jobs Act of 2017," and abstract.
Finally made the jump over here, and I'm excited to share some recent work, starting with this summer's JEP paper with @kylepomerleau.bsky.social and Jeffrey Hoopes. We find that TCJA fell short of its pro-growth goals while mainly benefiting the wealthy—at significant cost to the federal budget.
