A Proposal to Finance Long-Term Care Services through Medicare with an Income Tax Surcharge

Proposes expanding Medicare to cover comprehensive long-term care services, including home care and custodial nursing home care, and financing this expansion of benefits with a surcharge on federal income taxes

Tax Expenditures, the Size and Efficiency of Government, and Implications for Budget Reform

One possible explanation for the difficulty in controlling the budget is that a major component of spending —tax expenditures—receives privileged status. It is treated as tax cuts rather than spending. This paper explores the implications of that classification and illustrates how it can lead to higher taxes, larger government, and an inefficient mix of spending (too many tax expenditures). The paper then analyzes alternative budgeting approaches that would explicitly incorporate and measure tax expenditures. It concludes by analyzing ways to control tax expenditures (and other spending) and the special challenges presented by tax expenditures.

Pathways to Tax Reform Revisited

The U.S. income tax badly needs reform. It is complex, unfair, and inefficient. It doesn’t come close to raising enough revenue to finance government expenditures, and won’t any time in the foreseeable future unless it is revised. Raising tax rates could increase revenues, but it wouldn’t lessen the complexity and would magnify the unfairness and efficiency costs. Not surprisingly, proposals for reform abound. Income tax reform proposals would virtually all trim so-called tax expenditures, the 200 or so exclusions, deductions, and credits that are designed to provide subsidies for particular activities or groups. This would surely make the late Stanley Surrey smile. He invented the term tax expenditure and instructed the Treasury Department to compile a list and tally up their cost. He viewed cuts in tax expenditures as the “pathway to tax reform,” and in 1973 made the case in a book of that title. Surrey and latter-day reformers are surely right that cutting tax expenditures could raise revenue while reducing the economic cost of the tax system and making it simpler and fairer. The only drawback is political: voters like tax expenditures, the biggest of which are the mortgage interest deduction and the tax break on employer-sponsored health insurance. Simply eliminating people’s favorite tax breaks is unlikely to win much public support. This paper revisits Surrey’s pathway, examining various proposals to eliminate, reduce, or reformulate tax expenditures as part of tax reform. I start by outlining the need for tax reform. Then I examine various proposed paths to achieve it. I discuss options to cut tax expenditures and the efficacy of a VAT or carbon tax as a supplement to the income tax. The concluding section summarizes the potential pathways and a few dead ends on the way to tax reform

Capital Gains Taxation and Tax Avoidance: New Evidence from Panel Data

Previous theoretical analyses of the capital gains tax have suggested that investors have considerable opportunity to avoid the tax. Yet, past empirical work has found relatively little evidence of such activity. Using a previously unavailable panel data set with a very large sample of high-income individuals, this paper aims to bring the theory and evidence closer together by examining the behavior of individual taxpayers over time. Though confirming past findings that avoidance of tax on realized capital gains is not prevalent, we do observe that tax avoidance activity increased after the passage of the Tax Reform Act of 1986, and that high-income, high-wealth and more sophisticated taxpayers were most likely to avoid tax. However, the efficacy of tax avoidance strategies depends on being able to avoid tax for long periods, and we find that most tax avoidance is of relatively short duration. Thus, the effective tax rate on realized capital gains is very close to the statutory rate in all years and tax brackets.

An Analysis of the House GOP Tax Plan

This paper analyzes the House GOP tax reform blueprint, which would significantly reduce marginal tax rates, increase standard deduction amounts, repeal personal exemptions and most itemized deductions, and convert business taxation into a destination-based cash flow consumption tax. Taxes would drop at all income levels in 2017, but the highest-income households would gain the most. Federal revenues would fall by $3.1 trillion over the first decade (static) and$3.0 trillion after accounting for macroeconomic feedback effects. Including added interest costs, the federal debt would rise by at least $3.6 trillion over the first decade and by as much as$9.2 trillion by the end of the second ten years

Statewide Molecular Epidemiology of Mycobacterium tuberculosis Transmission in a Moderate- to Low-Incidence State: Are Contact Investigations Enough?

To assess the circumstances of recent transmission of tuberculosis (TB) (progression to active disease <2 years after infection), we obtained DNA fingerprints for 1,172 (99%) of 1,179 Mycobacterium tuberculosis isolates collected from Maryland TB patients from 1996 to 2000. We also reviewed medical records and interviewed patients with genetically matching M. tuberculosis strains to identify epidemiologic links (cluster investigation). Traditional settings for transmission were defined as households or close relatives and friends; all other settings were considered nontraditional. Of 436 clustered patients, 114 had recently acquired TB. Cluster investigations were significantly more likely than contact investigations to identify patients who recently acquired TB in nontraditional settings (33/42 vs. 23/72, respectively; p<0.001). Transmission from a foreign-born person to a U.S.-born person was rare and occurred mainly in public settings. The time from symptom onset to diagnosis was twice as long for transmitters as for nontransmitters (16.8 vs. 8.5 weeks, respectively; p<0.01). Molecular epidemiologic studies showed that eliminating diagnostic delays can prevent TB transmission in nontraditional settings, which elude contact investigations