Publications

The Alternative Minimum Tax, or AMT, is an inefficient, expensive to administer portion of the federal tax code. It began in 1969 to ensure that every taxpayer paid some tax by disallowing certain tax deductions if they reduced tax liability beneath a certain level. Today, it does not even accomplish that goal. Right now, it impacts a relatively small amount of taxpayers, but in the next 10 years, one of every 14 taxpayers will be ensnared by the AMT--and the government is counting on it. They've already factored this into the rosy budget surplus scenarios.

Have you ever thought of vacationing in Hawaii and not coming back? Should you decide to do this and be unable to find a job, never fear - you can fare well on welfare. In Hawaii, 88.8 percent of the 'poor' collect welfare benefits rather than seek work--a higher percentage than any other state. Why? Hawaiians can draw up to $664 weekly ($34,528 annually) on a permanent vacation or work for average local wages and earn $476 weekly ($24,752 annually.) Which would you choose? The 'poor' do make rational economic decisions in deciding whether or not to seek work. The success of 'workfare' programs bears this out.

Talks are underway about changing the way the CPI is computed, because it is believed that the current CPI index overstates inflation by as much as 1.1 percentage points. But if the CPI is lowered, it will result in reduced entitlement benefits but higher tax receipts to the federal goverment. Because of this "moral hazard," it is important that the CPI not be adjusted to suit political purposes, but rather to better reflect reality. This Policy Report explores the method and problems behind the CPI, and suggests remedies.

The Food and Drug Administration (FDA) after David Kessler is a much more powerful bureaucracy with more intrusive control over the medical industry than ever before. Author Dr. Robert Goldberg quotes Dr. essler's own writing: 'If members of our society were empowered to make their own decisions about the entire range of products for which the FDA has responsibility, however, then the whole rationale for the agency would cease to exist.' Dr Goldberg concludes, 'It would be a mistake to assume that it would be possible to reinvent the FDA by appointing a new commissioner. Kessler's use of power set a standard and transformed the way the FDA operates.'

Two words: Tax cuts. Surpluses should not be used for new government spending, or for paying down the national debt. They should be used to help return the overall tax burden to a reasonable level.

Articles include cover story celebrating IPI's Tenth Anniversary Banquet featuring Steve Forbes and Dr. Walter Williams. Dr. Williams' transcript is included as a newsletter article. Other articles: "Balancing the Budget--But at What Cost?" and "The Unmaking of the Constitution." Facts on the Growth of Government: The Balanced Budget: Not Necessarily Good News.

Articles include "The House Tax Package: A Good Deal?", "Fairy Tales: Fact and Fiction About Kids' Health Care", and "A Tax Deduction for Payroll Taxes." Facts on the Growth of Government: How Deregulation Creates Jobs.

The tax proposals approved by the House Ways and Means Committee give 75 percent of the individual tax cuts to taxpayers with less than $75,000 in adjusted gross income (AGI). Because they only pay 38% of all income taxes, this makes the tax package progressive. Contrary to those critics who believe this is a tax cut for the rich, the bill achieves a delicate balance between growth and political considerations. Though most of the tax cuts are directed at the middle class, growth generated by the bill would essentially offset the revenue loss over the next ten years.

Among the most persistent of political myths is the assumption that the 1981 Reagan tax rate reductions caused the massive and persistent federal budget deficits of the 1980s. In reality, out-of-control deficits were created when Congress dramatically increased government spending after the 1981 tax cuts. The entire deficit by 1985 was a product of drastically increased spending. Based on this myth that the 1981 tax cuts were responsible for large persistent federal deficits, more than 500 economists signed their name to a statement opposing 1996 Republican Presidential challenger Robert Dole's proposed 15 percent across-the-board tax rate reductions. They were all wrong.

Today, 40 percent of all workers with income tax returns pay more in payroll taxes than income taxes. That figure jumps to over 90 percent when the employer's share (also a part of employee compensation) is added. Under current law, payroll taxes withheld from workers' paychecks are counted as taxable wages--a tax on a tax. A proposal by Senator John Ashcroft (R-MO) would eliminate this double taxation by allowing workers an income tax deduction for their share of Social Security payroll taxes. Allowing this deduction would offer some relief, particularly for those with lower and middle incomes. It also would provide a modest boost to the economy and move in the same direction as broader-based tax reform, unlike the 'targeted' tax proposals such as child credits and tuition credits currently under consideration.