| 来源类型 | Article |
| 规范类型 | 评论 |
| The Skyline Tax | |
| Kevin A. Hassett; Diana Furchtgott-Roth | |
| 发表日期 | 1997-09-29 |
| 出版年 | 1997 |
| 语种 | 英语 |
| 摘要 | Suppose you’re the hard-working head of a household of four. Should you put more energy into earning? The decision will hinge partly on how much of any new income you will keep after paying taxes. Which depends on your marginal tax rate — the percentage of the last dollar earned that must be paid in tax. Low marginal income-tax rates encourage effort and earning. By contrast, the Taxpayer Relief Act of 1997 creates a crazy-quilt of marginal tax rates that only an accountant could love. The graph on the next page shows marginal tax rates under the new tax bill. Taxpayers are typical families of four with one child in college, making between $ 10,000 and $ 120,000. The graph bears a striking resemblance to the New York City skyline, with many peaks and troughs. Now, some people want a fiat tax and some want progressive taxes. There are even those who favor regressive taxes (on tobacco, alcohol, and gasoline). But no one has ever argued for a New York City skyline tax. This bizarre arrangement is a result of the way various tax breaks kick in and phase out. The earned income tax credit (EITC), the new child and education credits, and the new savings incentives are available to taxpayers over different income ranges. Next year’s $ 400 child credit, for example, phases out between $ 110,000 and $ 118,000 of income. And each of the phaseouts will require a different worksheet in the tax return, increasing headaches — and reliance on professional preparers. It’s true that marginal tax rates have never been uniform. The price we pay for our social safety net is higher marginal tax rates at income levels where entitlement programs are deemed unnecessary. And one example of anomalous marginal tax rates is already familiar: the “bubble” created by the 1986 Tax Reform Act when the tax rate rose from 28 to 33 percent, then dropped back to 28 percent. But the Taxpayer Relief Act raises such distortions to a fine art. Consider some highlights. At an income level of $ 20,000, a family of four faces a 21 percent marginal tax rate, as its EITC phases out. At $ 30,000, the new credits cancel out any tax liability and the income-tax rate drops to zero. The rate then rises rapidly thanks to phaseouts of the deductible IRA and the student-loan deduction. It reaches a high of 40.5 percent at $ 80,000, when the education credits phase out. At $ 100,000 the rate falls to 28 percent, before rising again with the phaseout of the child credit. When our typical family of four is making $ 80,000, each new dollar earned is taxed at a basic 28 percent. But suppose the family is taking advantage of the Hope Scholarship and the Lifetime Learning Credit, which phase out between $ 80,000 and $ 100,000. The family’s tax credits will decrease by 12. 5 cents for each extra dollar earned. Thus, its effective marginal tax is 12. 5 cents plus 28 cents — for a marginal tax rate of 40.5 percent. If the family were lucky enough to have three children in college, it would face a marginal rate of 53 percent — more like 66 percent when typical state and payroll taxes are added. Whatever the particulars of their situation, almost all families will face one view or another of the New York City skyline, as they pick and choose from a kaleidoscope of tax preferences. High tax rates resulting from the phaseouts will blunt the incentive to move up the income scale. While this constellation of tax rates is so absurd it is almost humorous, one group most assuredly is not laughing. Second earners, most of them women, fare very badly under this allegedly family-friendly bill. With a husband earning $ 70,000, a working wife will quickly push the family into a higher tax bracket. If the wife earns $ 20,000, her family’s marginal tax rate will exceed 40 percent — 54 percent with payroll and state taxes. This rule is family-friendly only to the extent it keeps women in the kitchen cooking dinner. It’s obvious that more careful thought has gone into the marketing of these tax provisions than into the provisions themselves. Elected officials may get some speechmaking advantage from the Hope Scholarship Credit, but they are sacrificing sound policy for soundbites. With higher rates, people think twice about investing their energy in extra work. Yes, some gain from the new provisions, but everyone would be better off if the new provisions were eliminated and we had lower, flatter, rates — not a New York City skyline tax, but a seashore tax. Diana Furchtgott-Roth is a resident fellow at the American Enterprise Institute and a member of the advisory board of the Independent Women’s Forum. Kevin A. Hassett is a resident scholar at the American Enterprise Institute. |
| 主题 | Economics ; Public Economics |
| URL | https://www.aei.org/articles/the-skyline-tax/ |
| 来源智库 | American Enterprise Institute (United States) |
| 资源类型 | 智库出版物 |
| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/235958 |
| 推荐引用方式 GB/T 7714 | Kevin A. Hassett,Diana Furchtgott-Roth. The Skyline Tax. 1997. |
| 条目包含的文件 | 条目无相关文件。 | |||||
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