Tax Incentives for Retirement Savings

Tax Incentives for Retirement Savings. Urban Institute. Eric Toder, Surachai Khitatrakun, and Aravind Boddupalli. May 11, 2020

Federal tax law provides substantial tax incentives for retirement saving. These include the deferral of taxes on contributions to retirement savings accounts by employers, employees, and self-employed taxpayers and the earnings on these contributions until the funds are withdrawn in retirement for traditional retirement accounts; the exemption of investment income accrued within retirement accounts for Roth retirement accounts; and a retirement savings tax credit for low-income taxpayers. This chartbook explores the implications of current-law income tax incentives for retirement savings, illustrates alternative ways of measuring the tax benefits they generate, and analyzes the distributional impacts of alternative tax proposals to encourage retirement saving. We find that tax incentives for retirement saving provide the largest benefits as a share of income to upper-middle-income taxpayers. [Note: contains copyrighted material].

[PDF format, 24 pages].

Tax Cuts and Economic Stimulus: How Effective Are the Alternatives?

Tax Cuts and Economic Stimulus: How Effective Are the Alternatives? Congressional Research Service. Jane G. Gravelle. Updated May 14, 2020

The economic effects of the Coronavirus Disease 2019 (COVID-19) pandemic has led Congress to enact general fiscal stimulus in the form of tax cuts and spending increases. Further stimulus may be considered. This report discusses tax cuts enacted during the Great Recession, as well as those recently enacted and those under consideration.
In response to the Great Recession several types of tax cuts were debated as possible fiscal stimulus—with fiscal stimulus legislation enacted in February 2008 (P.L. 110-185) and a much larger one in February 2009 (P.L. 111-5). Both bills included individual tax cuts aimed at lowerand middle-income individuals, along with business tax cuts. In December 2010, along with an extension of expiring tax cuts, a temporary payroll tax cut was adopted. Many, but not all, tax cuts that were expiring after 2012 were extended permanently.

[PDF format, 12 pages].

Tax Incentives for Charitable Contributions

Tax Incentives for Charitable Contributions.   Urban Institute. Rob McClelland et al.  November, 12 2019

This Chartbook explores the implications of current law income tax incentives for charitable donations along with several alternatives for tax deductions that are more universally available. [Note: contains copyrighted material].

[PDF format, 17 pages].

Rethinking Unemployment Insurance Taxes and Benefits

Rethinking Unemployment Insurance Taxes and Benefits. Urban Institute. Ryan Nunn, David Ratner. October 28, 2019

This paper addresses economic issues related to the unemployment insurance (UI) system, focusing on the worker- and employer-facing aspects of UI policy—i.e., the ways that benefits are provided to workers and that employers are taxed to fund those benefits. We outline principles for optimal design, grounding these principles in the relevant research literature. These principles guide the empirical analysis of the paper, which focuses on establishing the quantitative importance of the considerations that motivate those principles. This leads to several specific areas of investigation and policy recommendations: benefit structure, rules for eligibility, experience-rated UI tax schedules, and interactions of UI with part-time work, among others. [Note: contains copyrighted material].

[PDF format, 38 pages].

Training for Jobs of the Future: Improving Access, Certifying Skills, and Expanding Apprenticeship

Training for Jobs of the Future: Improving Access, Certifying Skills, and Expanding Apprenticeship. Urban Institute. Robert I. Lerman, Pamela J. Loprest, Daniel Kuehn. October 3, 2019

Long run labor market trends in the American economy pose significant challenges. Growth in real money wages has been slow, with the most rapid gains taking place among workers at the top of the earnings distribution. Labor force participation and employment rates have been falling. Reduced labor force participation and obsolescence of workers’ skills weigh down GDP growth, with predictable negative repercussions for living standards and federal revenue. These trends suggest a need for a major revamping of policies and programs that prepare people for careers and retrain people who must change careers. The authors focus on three major policy initiatives to maximize worker training to bolster productivity and wages: Improve access to in-demand training; strengthen connections between career and technical education and training and employer needs; and build a robust apprenticeship system that emphasizes learning by doing in a context that involves apprentice contributions to production, and culminates in a respected occupational credential. This new system goes beyond the “academic-only” approach commonly pursued in the US and should match individual interests, aptitudes, and skills to in-demand jobs and make new training investments that are cost effective and valued by employers. [Note: contains copyrighted material].

[PDF format, 41 pages].

Tax Issues Relating to Charitable Contributions and Organizations

Tax Issues Relating to Charitable Contributions and Organizations. Congressional Research Service. Jane G. Gravelle, Donald J. Marples, Molly F. Sherlock. September 19, 2019

The federal government supports the charitable sector by providing charitable organizations and donors with favorable tax treatment. Individuals itemizing deductions may claim a tax deduction for charitable contributions. Estates can make charitable bequests. Corporations can deduct charitable contributions before computing income taxes. Further, earnings on funds held by charitable organizations and used for a related charitable purpose are exempt from tax. In FY2019, projected tax subsidies for charities, not including the value of the tax exemption on earnings of charities or the estate tax deduction, totaled $51.8 billion. If investment income of nonprofits were taxed at the 35% corporate tax rate in 2015, revenue collected is estimated at $26.7 billion (this amount excludes religious organizations). The cost of deducting bequests on estates is estimated at $4 billion to $5 billion.

[PDF format, 52 pages].

Tax Policy and Disaster Recovery

Tax Policy and Disaster Recovery. Congressional Research Service. Molly F. Sherlock, Jennifer Teefy. August 9, 2019

The Internal Revenue Code (IRC) contains a number of provisions intended to provide disaster relief. Following certain disasters, Congress has passed legislation with temporary and targeted tax relief policies. At other times, Congress has passed legislation providing tax relief to those affected by all federally declared major disasters (disasters with Stafford Act declarations) occurring during a set time period. In addition, several disaster tax relief provisions are permanent features of the IRC.

[PDF format, 27 pages].

Attaching a Price to Greenhouse Gas Emissions with a Carbon Tax or Emissions Fee: Considerations and Potential Impacts

Attaching a Price to Greenhouse Gas Emissions with a Carbon Tax or Emissions Fee: Considerations and Potential Impacts.  Congressional Research Service. Jonathan L. Ramseur, Jane A. Leggett. March 22, 2019

The U.S. Fourth National Climate Assessment, released in 2018, concluded that “the impacts of global climate change are already being felt in the United States and are projected to intensify in the future—but the severity of future impacts will depend largely on actions taken to reduce greenhouse gas [GHG] emissions and to adapt to the changes that will occur.” Members of Congress and stakeholders articulate a wide range of perspectives over what to do, if anything, about GHG emissions, future climate change, and related impacts. If Congress were to consider establishing a program to reduce GHG emissions, one option would be to attach a price to GHG emissions with a carbon tax or GHG emissions fee. In the 115th Congress, Members introduced nine bills to establish a carbon tax or emissions fee program. However, many Members have expressed their opposition to such an approach. In particular, in the 115th Congress, the House passed a resolution “expressing the sense of Congress that a carbon tax would be detrimental to the United States economy.”

[PDF format, 40 pages].

Partners or Pirates? Collaboration and Competition in Local Economic Development

Partners or Pirates? Collaboration and Competition in Local Economic Development. Urban Institute. Megan Randall et al. December 20, 2018

In this report, the authors explore how and why local governments have turned to cooperation to boost economic development. They synthesize highlights from the literature, explore program features from two regional case studies, and share findings from interviews with local practitioners. Although research on the effectiveness of current practices is limited, they identify themes that can inform cooperative economic development. [Note: contains copyrighted material].

[PDF format, 67 pages].

How to Design Carbon Dividends

How to Design Carbon Dividends. Urban Institute. Donald Marron, Elaine Maag. December 12, 2018

A robust carbon tax would generate considerable revenue. Some carbon tax advocates have suggested returning those revenues to Americans through direct payments, often called carbon dividends. We examine how to design these dividends considering two, sometimes conflicting, principles. Carbon dividends can be viewed as shared income from a communal property right, much as Alaskans share in income from the state’s oil resources. Dividends can also be viewed as rebating the carbon tax back to consumers. These views often have different implications for designing carbon dividends. Political and practical considerations are also important. With that in mind, we propose a carbon dividend design that combines beneficial features from both the communal property and tax rebate views. [Note: contains copyrighted material].

[PDF format, 45 pages].