Tax Policy

“Do not pass go, do not collect $200,” the harsh cliché made ubiquitous by Monopoly, is essentially what the Internal Revenue Service told a group of universities recently. A special report from the IRS found several institutions had inflated their Baltic Avenue social statuses to Boardwalk for the purpose of setting executive compensation. Roughly 20 percent of the private, nonprofit subset of colleges and universities that were selected for inclusion in the report have been told they are not in compliance with statutes governing executive pay in charitable organizations. One result is that “the IRS plans to […] ensure, through education and examinations, that tax-exempt organizations are aware of the importance of using appropriate comparability data when setting compensation.” This statement constitutes a clear shot across the bow of universities locked into the never-ending game of reputational enhancement—often sacrificing important work for visible work and attempting to become cool-by-association (e.g., rank, “tier,” membership in exclusive groups). The implications for proliferation of the IRS-approved measures of comparability extend well beyond executive pay, and the potential for new precedent in reducing competitive perversities among universities is enormous.

Fresh off the presses are two reports highlighting the dismal state of college affordability: the first was released Wednesday by the State Higher Education Executive Officer's Association showing that college costs rose 8.3 percent last year and the second from Sallie Mae released last Tuesday (slightly less fresh) showing that less families are savings for college and thos

If there is to be any durable hope for a social contract that transcends left-right partisanship, that contract must rest upon a majority consensus about policies that are efficient, fair, and sustainable. Once the smoke has cleared from this November’s battle over the role of government, what will endure are several policy prescriptions kept alive by an objective reading of economic history and a general consensus among economists.

The last thirty years of American history have witnessed, at least rhetorically, a battle over the size of government. Yet that is not what the history books will say the next thirty years of American politics were about. With the frontiers of the state roughly fixed, the issues that will dominate American politics going forward will concern the complexity of government, rather than its sheer size.

Tax reform is like the weather – everyone talks about it, but no one ever does anything about it. But unlike inclement weather, the problems of the tax system don’t go away; they continue to fester and compound. Today there are a number of unpleasant trends in the federal tax system that are crying out for attention:

The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include college financing, housing policy, consumer protection, and asset limits.

Matthew O’Brien over at The Atlantic had a piece up yesterday with the bold headline: “Why the Mortgage Interest Deduction is Terrible.” What he means (and does a solid job at explaining in the piece) is that the mortgage interest tax deduction primarily benefits homeowners in the top fifth of income earners. O’Brien writes, “We spend $100 billion every year -- that's the annual cost of the deduction -- subsidizing bigger houses for the upper middle class. This should be among the lowest of low-hanging fruit when it comes to tax reform. It would be nice to end welfare for the well-off.” He notes that the top 1% of earners (those making over half a million dollars a year) receive more benefit from the mortgage interest deduction than the entire bottom 56% of earners combined.

Last week, New York City Mayor Michael Bloomberg announced that he was expanding the city’s “Health Bucks” program, which gives shoppers using SNAP at farmers markets an additional $2.00 for every $5.00 they spend, to all 138 of the city’s markets. Like matched savings accounts and other initiatives that reward productive choices, Health Bucks is a great example of how incentive-based policies and investments can change behavior—and counter longstanding myths about what is and is not possible for low-income families in the meantime.

This blog post is part two in a series analyzing the recently released Survey of Consumer Finances from the Federal Reserve. The SCF is a triennial survey of American families that offers insights into income, wealth, debt, and savings over time. Today’s post explores the data on retirement account ownership.

Saving adequately for retirement helps pave the road to a comfortable and financially secure future. As part one of this series noted, the 2010 Survey of Consumer Finances (SCF) data show that in 2010, Americans prioritized the need for liquidity over saving for retirement for the first time since 2001. While precautionary savings allow families to plan for the short and mid-term, saving for retirement remains a critical long-term savings need. Indeed, despite the drop from first place, SCF data show that retirement ranked a close second in 2010.

On Wednesday, May 30, the Asset Building Program hosted two authors for a conversation about the history, politics and rhetoric of income inequality in the U.S. Reid Cramer, Director of the Asset Building Program, introduced Timothy Noah, Senior Editor at The New Republic and author of The Great Divergence: America's Growing Inequality Crisis and What We Can Do about It, and David Corn, Washington Bureau Chief of Mother Jones and the author of Showdown: The Inside Story of How Obama Fought Back Against Boehner, Cantor, and the Tea Party.