On July 14, the Senate Finance Committee held a hearing on the future of individual tax rates and their effects on economic growth and distribution. Witnesses included economists Len Burman, Doug Holtz-Eakin, and Donald Marron.
In a July 7 post, economist Donald Marron notes that federal revenues as share of GDP are very substantially below normal—14.9 percent currently versus a postwar average of 18.2 percent. Because revenues rise faster than economic growth due to a progressive tax system, the Congressional Budget Office is forecasting a substantial tax increase in coming years even if various legislated tax increases, such as for the AMT, are prevented from taking effect.
In a July 5 article, University of Texas law professor Calvin Johnson presents a laundry list of revenue-raising options that would in total produce $1 trillion without raising statutory rates or imposing a VAT.
A July 2 poll from The Economist magazine asked people how best to tax estates. A majority said they favor a top rate of 20 percent or less; only 10 percent of those polled favor returning the top rate to 55 percent, as it will next year under current law.
On June 28, the European Union released new data on taxation in the EU. The overall tax/GDP ratio was 39.3 percent in 2008, and Denmark was the most heavily taxed country with a tax/GDP ratio of 48.2 percent. The average top statutory income tax rate has fallen to 37.5 percent in 2010 from 44.7 percent in 2000.
On June 17, the CBO released new data on average federal tax rates in 2007. CBO director Doug Elmendorf comments here.
In a May 28 post, political scientist Alvin Rabushka, co-author of the Hall-Rabushka flat tax proposal, said that supply-siders overstate the negative impact of tax increases on the economy.
An April study by Lily Bachelder and Eric Toder looks at government spending programs administered by the Internal Revenue Service. They argue that such programs are not subjected to the same level of scrutiny or performance evaluation. Reforms are suggested that would improve their effectiveness. (Note: Lily Bachelder was recently named chief tax counsel of the Senate Finance Committee.)
