Debt. We’re deep in it – and still digging. Some economists warn that our national debt is growing to dangerous levels and could end up hurting our economy in the short- and long-term. Others caution there’s no need for alarm; the debt is manageable and is even a necessary byproduct of policies designed to boost the economy in sluggish times.
Benjamin Franklin famously wrote “Nothing in life is certain – except death and taxes.” Sadly, he was pretty on target, but although they're inevitably that doesn't mean taxes can't be fun to learn about! (Be kind: we're geeks – we spend all day writing about policy.) Needless to say, taxes are a complicated topic, but to help simplify matters, we break our tax page into two parts; a general overview of our tax system followed by (for those looking for adventure) an in depth analysis of the brackets, percentages and categories associated with our tax system – Enjoy!
Total Federal revenue from taxes (2007) CBO (pdf)
18.8% of GDP
federal revenue - as % of national economy (GDP) - over the years
Issue in Brief
The “estate” or “death” tax – which takes a cut of person's wealth before it passes on to the heirs – is phasing out, as part of the 2001 Bush tax cuts, but it will pop back in full pre-Bush force after 2010. Many would like to see those cuts extended after the 2011 expiration date or to see the cuts expanded. Some would prefer the death tax disappeared altogether. The House under Bush has voted umpteen times to permanently ditch or reduce the estate tax, but a permanent cut always got stuck in the Senate. With the dems taking charge in 2007, efforts to dispel the estate tax ended; instead the Obama administration is seeking to fix a long-term compromise, holding the estate tax exemption at $3.5 billion.
Bills in Brief
While plans for any large scale tax overhaul are on hold until 2009, Congress continues to tweak, extend and slice taxes on an ongoing basis.
In 2006, Congress managed to extend a couple of Bush tax cuts in 2006 - including capital gains and dividends cuts and relief from the Alternative Minimum Tax (AMT).
At the tail end of the year, Congress also squeezed through some last minute tax credit extensions, including; research and development credits for business, college tuition deductions, state sales tax deductions (for those in states with no income tax), and incentives to hire welfare recipients and to conserve energy. (WP)
Efforts to pull off a permanent cut to the estate tax went no where in 2006.
Congress will again try to keep AMT at bay in 2007 at the same time as twittering around with minor tax breaks and tweaks.