Revenue and Distributional Effects of the Individual Income and Estate Tax Provisions of Senator Thompson’s Plan for Tax Relief and Economic Growth

Leonard Burman
Written by: Leonard E. Burman, Greg Leiserson, and Jeffrey Rohaly[1] Republican Presidential Candidate Fred Thompson announced a tax reform plan that permanently extends the 2001–2006 individual income tax cuts; permanently repeals the federal estate tax; repeals the individual alternative minimum tax (AMT) at an unspecified future date while indexing the AMT exemption for inflation until that time; lowers the corporate...

Tax Shelters and the Code: Navigating Between Text and Intent

Steve Dean
Written by: Steven A. Dean and Lawrence M. Solan I. INTRODUCTION Tax shelters raise difficult problems of statutory interpretation. In her interesting article, Of Lenity, Chevron, and KPMG,[1] Kristin Hickman explores one of them: the recent tendency of courts to apply the rule of lenity in civil cases, potentially leading to a narrow interpretation of the Internal Revenue Code (Code) that would undermine efforts...

Healing self-inflicted wounds – Representing nonfilers

Burton J. Haynes
Never do today what you can put off until tomorrow . . . All of us procrastinate. But some take things to dangerous extremes -- putting off the filing of tax returns for a few years, or even many years. The IRS estimates that each year some ten million people fail to file their tax returns. What do you do with the new client who walks in and explains that he hasn't filed returns for three, six or ten years? This article...

Elephant in the Parlor: Repeal of Stepup in Basis at Death

Calvin Johnson
This proposal would end the step-up in basis for property acquired by reason of the death of another individual and increase the tax on inherited property when it is sold. The exemption for built-in gain at death is unfair because it allows consumption, even sumptuous consumption of investments by heirs, without either the heir or original owner paying tax on the consumption.[1] Under normal patterns, tax on heirs...

Who Benefits from the Earned Income Tax Credit? Incidence Among Recipients, Coworkers and Firms

Andrew Leigh
Abstract How are hourly wages affected by the Earned Income Tax Credit? Two strategies are utilized to determine the relationship between the credit and hourly wages. First, I use variation in state EITC supplements, which magnify the effect of the federal EITC. I find that a 10 percent increase in the generosity of the EITC is associated with a 4 percent fall in the wages of high school dropouts and a 2 percent fall...

Global Trends and Constraints on Tax Policy in the Least Developed Countries

Allison Christians
Through decades of tax reform and cross-border collaboration, the world’s wealthiest countries have adopted domestic tax policy norms that meet their mutually beneficial interests. But these norms have introduced rigorous change and increasingly rigid parameters for tax policy in the world’s poorest countries. While much scholarly attention is devoted to identifying tax strategies that poor countries could or should...

Federal Tax Liens – Part II

Burton J. Haynes
This is the second part of a two-part article about the federal tax lien. The last article covered the nature of the lien, focusing primarily on its broad reach, attaching as it does to "all property and rights to property" of the taxpayer wherever situated. In the paragraphs below, we will consider the priority of the federal tax lien as compared to the liens of other creditors claiming interests in the taxpayer's property....

Tara revisited – The new “innocent spouse” rules

Burton J. Haynes
Scarlett: But Rhett darling, our Separation Agreement requires you to pay any taxes resulting from the IRS audit that was going on during our divorce. Now Revenue Officer Sherman has levied my wages and seized my horse and my last mint julep! Rhett: Frankly, my dear, I don't give a damn. Sound familiar? Ever represent a client whose ex-husband invested in tax shelters or claimed erroneous deductions on a joint...

Family Income and Income Taxes During the Economic Recovery

Jim Saxton
Executive Summary This report examines the federal tax burden for middle-income married-couple families with two children, and reaches the following conclusions: Median income after taxes for married-couple families with two children reached a record high of $57,330 in 2003, an increase of $1,233 (or 2.2 percent) from the 2000 level. The income tax relief passed in 2001 and 2003 buoyed income after federal taxes...

The Economics of the Estate Tax: An Update

Daniel Miller
Executive Summary This analysis examines the arguments for and against the federal estate tax and concludes that the estate tax generates costs to taxpayers, the economy, and the environment that far exceed any potential benefits that it might arguably produce. • The existence of the estate tax has reduced the stock of capital in the economy by approximately $497 billion, or 3.2 percent. • The estate tax...
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