Publications

The purpose of this issue brief is to focus on how changing the tax treatment of married couples would affect the economy. As background, the first section explains how the tax code and marital status interact. The next section estimates the economic and revenue consequences of four proposals
while the last section discusses whether reducing marriage penalties makes for good tax policy.

 Recently released figures lead us to estimate that the federal budget surplus could be roughly $1 trillion higher than Congress expected when it drafted the bi-partisan budget deal at this time last year. We believe that at least half of this $1 trillion windfall (but preferably all of it) should be returned to taxpayers via a very large tax cut enacted immediately.

Articles include "Will Taxpayers be Last in Line for Budget Surpluses?", The Alternative Minimum Tax (AMT): A Ticking Time Bomb Aimed at the Middle Class," "The Golden Rules for Making a Million," and "Getting Hit from Both Sides: Adjusting CPI Downward Cuts Entitlements and Raises Taxes."

New requirements to track additional asset holding periods have greatly increased the complexity in calculating capital gains taxes. Our researchers, Gary and Aldona Robbins, point out the reasons why these added complications are totally unnecessary.

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.