Horizontal equity across families has played little role in forming tax policy. Using an index to equate different families, the earned income credit (EIC) is shown to create dramatic effective tax rate differentials at low incomes, favoring families with two children. In the middle, the child...

The alternative minimum tax (AMT) is a complex, unfair, and inefficient shadow tax system that threatens to affect 32 million taxpayers by 2010, many of them solidly middle class. Under current law, repealing the AMT without offsets would cost more than $850 billion through 2017. This paper...

A bipartisan consensus favors public policy initiatives to expand health insurance coverage. This paper summarizes new Current Population Survey (CPS) data on health insurance coverage for the non-elderly and discusses the issues involved in subsidizing health insurance. We outline a tax credit...

Explores the evidence on how tax-favored savings accounts affect national saving. Looked at in terms of the traditional life-cycle model of savings, such accounts would not be expected to increase national savings; because of the limitation on annual contributions, the tax incentive might well...

The emergence of large and apparently growing budget surpluses represents a paradigm shift for tax policy. This speech examines and dismisses some contrarian views about the effect of surpluses on fiscal well being, and then addresses three questions: (1) Is the surplus real? (2) Do surpluses or...

Analyzes the efficiency costs of promoting access to health care through subsidies for employment-based insurance. Suggests that alternative policies may meet the same objectives.

Discusses the revenue consequences of cutting tax rates on capital gains. Develops a model of taxpayer responses to transitory (not permanent) tax changes and tests its implications using data on asset transactions in the Sales of Capital Assets panel compiled by the IRS. Finds evidence that...

Continuation of current U.S. fiscal policy will lead to an enormous accumulation of debt with potentially disastrous economic consequences. Exacerbated by the recent economic turmoil and fueled by the willingness of creditors to lend at very low interest rates, there is significant risk that...

The term "tax expenditure" refers to departures from the normal tax structure designed to favor a particular industry, activity, or class of persons. Most budget experts view the tax expenditure budget as a useful tool in managing the size and scope of the federal government, but a growing...

We examine workers' disposition of pre-retirement lump-sum distributions, using policy changes in 1986 and 1992 as natural experiments. We find that higher taxes on cash-outs increase rollovers, consistent with both rational and behavioral motives. Several results, however, only make sense in a...