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Publications on Economy/Taxes

Tax and fiscal policy will loom large in the next president's domestic policy agenda. Nearly all of the tax cuts enacted since 2001 expire at the end of 2010 and the individual alternative minimum tax (AMT) threatens to ensnare tens of millions of Americans. While a permanent fix palatable to both political parties has proven elusive, both candidates have proposed major tax changes. This report describes how we performed our modeling and analysis, outlines the major tax proposals, and discusses the implications of their policies for the revenue raised, taxpayer economic activity, and the distribution of the tax burden.

Both John McCain and Barack Obama have proposed tax plans that would substantially increase the national debt over the next ten years, according to an updated analysis by the non-partisan Tax Policy Center. Compared to current law, TPC estimates the Obama plan would cut taxes by $2.8 trillion from 2009-2018. McCain would reduce taxes by nearly $4.2 trillion. Under current law, the 2001 and 2003 tax cuts would expire in 2010 and the Alternative Minimum Tax would remain in full force.

Low-wage jobs can be unstable, leaving families struggling to cope with employment gaps and financial emergencies that can strike without warning. About four in five low-income families are "asset-poor," lacking enough liquid savings to live for three months at the federal poverty level without earnings. In this summary, McKernan and Ratcliffe suggest a cluster of policies that would improve financial markets and savings opportunities for low-income families across the life cycle.

One-third of America's families with children are low income, meaning their incomes fall below twice the federal poverty level. Although four in five of these families work, many don't bring home enough to cover the everyday costs of living. In this essay, Acs and Turner outline their proposals to enhance low-income families' purchasing power and reduce unusually high housing costs through a package of reforms and policy initiatives that tackle both the income side and expenditure side of family budgets.

This paper is a response to New Safety Net Paper 7, "Enabling Families to Weather Emergencies and Develop: The Role of Assets," by Signe-Mary McKernan and Caroline Ratcliffe.