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Taxes and Spending blog
From Taft to Hoover to Grace to Gore, a Century of Commissions on Waste Presidents of both parties have studied federal waste since 1910. The record shows what got adopted, what was ignored, and why reform sticks or fails. Remittances Leave the Country by the Billions. Should Washington Tax Them Conservatives split on taxing or tracking money that workers send home, so here is each side's best case and the one I find stronger. Find out what your city and state really spend, a citizen's budget guide Six numbered steps to read the audited reports, budgets and contracts your city and state publish, and how to speak up before the vote. Read a CBO cost estimate yourself before you believe the headline Seven numbered steps for reading a Congressional Budget Office cost estimate, with a worked example, so spin from either party stops working on you. PEPFAR and the Marshall Plan, When Conservatives Defended Foreign Aid Two American aid programs, the Marshall Plan and PEPFAR, show what targeted aid can do, and the skeptics' case against aid to governments shows where it fails. Foreign Aid Is Not a Quarter of the Budget, and Other Myths Tested Foreign aid is about one percent of federal spending, not a quarter, and getting that wrong means conservatives argue the wrong case against the real problems. Taxpayer-funded stadiums are the billion-dollar bet cities keep losing Economists rarely agree, yet most find public stadium money does not deliver the growth promised. The financing, the arithmetic and the civic-pride case. The 16th Amendment Began With a Promise That Only the Rich Would Pay Why the income tax needed an amendment, how it was sold in 1913 as a levy on the wealthy, and how the Constitution left nothing to stop it spreading. Self-Sufficiency Was the First Immigration Rule, the Public Charge Story From colonial poor laws to the 1882 Act to Form I-864, the rule that newcomers must support themselves is the oldest idea in American immigration law. What the National Academies Found on Immigration's Fiscal Costs The 2016 National Academies report says the bill depends on who comes, at what age and with what schooling. Here is why selection beats volume. Bastiat Called It Legal Plunder When the Law Takes From One to Give Another Bastiat's 1850 pamphlet The Law gave us a simple test for plunder by statute. Read its passages, its French setting and the best objection to it. Davis-Bacon at ninety, the 1931 wage law that raises the price of a bridge The Davis-Bacon Act sets federal construction wages by survey, often at union scale, and its 1931 debate had a racial edge. What it costs and what it protects. The Pentagon Has Never Passed an Audit, and Conservatives Should Mind A limited-government movement cannot exempt the biggest discretionary agency from the books it demands of everyone else. Here is what a failed audit means. Defense Spending as a Share of the Economy, From Korea to the 2010s Measured against the economy, defense fell from a Korean War peak to near historic lows while entitlements grew. The Pentagon is not what drives the debt. The Bridge to Nowhere Was Never Built, and Earmarks Came Back Anyway The Gravina bridge became the symbol of pork, House Republicans banned earmarks in 2011, and Congress revived them in 2021. Both sides get a hearing. Baby bonuses, tax credits or cheaper houses, comparing pro-family policies Six conservative tools to help families form, rated for cost, work incentives and federalism, with both sides of the fight over cash payments. The marriage penalty buried in welfare programs, with the math shown Means-tested programs can make marriage cost a low-income couple thousands of dollars a year. Here is the arithmetic, program by program, and the fixes. Two Railroads Across America and the One James J. Hill Built Without Land Grants The first transcontinental took federal bonds and land and ended in scandal, while Hill's Great Northern took neither and survived the panic that broke rivals. Bob Jones University, the IRS and the question it left every church Bob Jones University v. United States (1983) upheld revoking a school's tax exemption over racial discrimination, and its reasoning still matters to churches. Should pastors endorse candidates? The Johnson Amendment fight, argued fairly A 1954 floor amendment gagged churches on campaigns, and conservatives split over repeal; here is the free-speech case, the pulpit case, and a verdict. The Federal Workforce Is Smaller Than You Think, and That Is the Problem Federal headcount grew about a fifth as spending multiplied, since Washington governs by contractors, grantees and states. Cut programs, not jobs. Tax-Credit Scholarships, the Choice Program Built on Private Donations A tax-credit scholarship moves no appropriated money, which is why it survived lawsuits that sank other choice programs, and Congress has now copied it. Earmarks came back, and the conservative argument over pork never ended Earmarks are a small share of spending and a large symbol. Conservatives split on whether banning them restrained spending or just empowered agencies. Friedman's Four Ways to Spend Money Explain Every Government Budget Your own money on yourself is spent carefully; other people's money on other people is spent carelessly twice over, and most government spending is the latter. The Biggest Tax Break in America Hides in Your Paycheck Stub The unlimited tax exclusion for employer health coverage favors the best-paid, hides the cost of care and locks people into jobs; equal treatment is the fix. The Wind Tax Credit Was Temporary in 1992 and Kept Coming Back for Decades A per-kilowatt-hour credit meant to be short-lived was renewed again and again, and the arithmetic shows how it bends the power market it was meant to nudge. Baseline budgeting, where a smaller increase gets reported as a cut Washington measures spending against a baseline that assumes automatic growth, so a program that gets more money can be reported as cut. How to read it. Real Spending Per Pupil More Than Doubled Since 1970, So Where Are the Gains Inflation-adjusted spending per student soared while 17-year-old scores stood still, which shows money alone is not the answer, and how it is spent is. Four Conservative Health Plans Side by Side, From Tax Credits to Block Grants Four real conservative health bills compared on credits, Medicaid, preexisting conditions and state flexibility, with a verdict on which suits which goal. The corporate rate cut to 21 percent and the inversions it brought to an end Before 2018 the corporate rate was 35 percent and firms moved their legal homes abroad. Here is what the 2017 law changed, and the answer to the buyback charge. Tax the rich more? The wealth tax failed across Europe and was repealed Most European countries that taxed net wealth dropped it: it raised little, drove capital abroad and cost a lot to run. The record, the math, Article I. A century of top income tax rates, from 7 percent in 1913 to the 2018 law Twelve dated entries on the top federal income tax rate, from 7 percent in 1913 to 94 percent in 1944 to 37 percent in 2018, and what each swing says. A flat tax, a national sales tax and a VAT, compared for one family The current code, a flat tax, the FairTax and a VAT compared for one family, and why a VAT stacked on an income tax is the worst outcome for limited government. Where tax cuts pay for themselves and where they honestly do not Some tax cuts recover most of their cost and some do not. Conservatives should say which is which, and defend lower rates on freedom and growth either way. The EITC began as a conservative idea and now pays out billions in error The Earned Income Tax Credit rewards work, which is why conservatives backed it, but its design yields one of the highest improper-payment rates in government. Capital gains taxes and the lock-in effect that keeps money frozen in place Gains are taxed only on sale, so high rates freeze capital in old holdings, and because gains are not indexed, part of the tax falls on inflation. How the Kemp-Roth Tax Cut Went From a Backbench Bill to a Party's Creed The Kemp-Roth bill lost in Congress in the late 1970s and became law in 1981. A minority can win by forcing votes on the right idea. Withholding began as a wartime emergency in 1943 and simply never left Withholding was sold as a wartime measure and made the tax bill vanish before the money arrives. A tax you never see is a tax that grows. Tax complexity is a subsidy for lobbyists, and the code shows how it works Every deduction and credit in the tax code was won by someone who asked for it, so complexity is a business model that costs ordinary filers hours and money. The death tax, the family farm and the case for ending a tax on dying The estate tax raises a sliver of federal revenue while families spend heavily on lawyers and planning to avoid it, and it taxes money already taxed once. Why the corporate income tax is paid by people, and the only question is who A corporation is a legal form, not a taxpayer, so every dollar of corporate tax lands on shareholders, workers or customers. The only question is which of them. The Sixteenth Amendment and the 1913 bargain that built the income tax The Court struck down the first peacetime income tax, the people amended the Constitution, and the promise that only the rich would pay did not last. Why Every Tax Bill Must Start in the House, and How the Senate Gets Around It The Origination Clause gives the House first word on taxes. The Senate's amendment power, and the shell bill, have quietly hollowed it out. Madison and Hamilton Fought Over Two Words, General Welfare, and We Still Pay Madison read general welfare as a summary of the listed powers; Hamilton read it as a power to spend. Hamilton won in court, and the bill keeps growing. Benefit cliffs can make a raise cost a single mother real money When means-tested benefits phase out together, a low-wage worker can face a higher effective rate than a millionaire. A labelled example, CBO, and fixes. The marginal rate is the one that decides whether you work the extra shift Your average tax rate is a statistic; your marginal rate is a decision. How brackets really work, and why the next dollar's rate shapes work, saving and risk. Who actually pays the federal income tax, read straight from the IRS tables The IRS's own tables show a small share of filers carry the income tax while tens of millions owe nothing, the reverse of the claim that the rich pay nothing.