Urban Institute: Economy/Taxes

Measuring Effective Tax Rates

paffairs@urban.org ( Rachel M. Johnson, Joseph Rosenberg, Roberton Williams ) — Wed, 08 Feb 2012 00:00:00 EST

Effective tax rates (ETRs) measure how much people pay in taxes as a percentage of their pretax incomes. That seems simple, but theres an important complication: there are different ways to measure how much someone pays in taxes and how much he collects in pretax income. Those choices matter a great deal. As a result, it is essential to use the same ETR measure when comparing tax burdens across individual taxpayers or groups.

Boomers' Retirement Income Prospects

Mon, 06 Feb 2012 00:00:00 EST

The lackluster economy, eroding traditional pensions, and volatile stock market suggest that baby boomers - those born between 1945 and 1965 - face increasingly uncertain retirements. Our projections show that lower - and moderate-income boomers will continue to rely on Social Security for most of their retirement income. While the projections reflect some good news - women will reap the rewards of working and earning more than previous generations - they also raise alarms. Between 30 and 40 percent of boomers will not have enough income at age 70 to replace 75 percent of their preretirement earnings, a common standard for measuring retirement income adequacy.

Distributional Effects of Individual Income Tax Expenditures: An Update

paffairs@urban.org ( Daniel Baneman, Eric Toder ) — Fri, 03 Feb 2012 00:00:00 EST

Tax expenditures on average raise after-tax incomes more for upper-income than for lower-income taxpayers. As a share of income, special rates for capital gains and dividends and itemized deductions provide the largest benefits for taxpayers in the top 1 percent of the income distribution, exemptions and exclusions benefit taxpayers in upper middle-income groups the most, and refundable credits provide the largest benefits to those in the bottom two quintiles of the distribution. Interactions among provisions make the revenue cost of all tax expenditures about 10 percent larger than the sum of the costs of the separate provisions.

Curbing Tax Expenditures

Tue, 31 Jan 2012 00:00:00 EST

This paper takes a broad look at tax expenditures in the context of revenue raising tax reform. It first reviews how tax expenditures have changed over the past 25 years and provides estimates of the distribution of tax savings resulting from tax expenditures today. The paper then examines three approaches for applying across-the-board limits to a selected group of the largest and most widely utilized tax preferences. The three optionsa fixed percentage credit, a cap based on income, and a constant percentage reductioncan all be designed to raise significant revenue for deficit reduction in a progressive manner.

Health Reform's Tax on Investment: Facts and Myths

paffairs@urban.org ( Donald Marron ) — Tue, 31 Jan 2012 00:00:00 EST

To help pay for expanded health insurance coverage, the health reform legislation enacted in 2010 included a new 3.8 percent tax on the net investment income of high-income taxpayers. When it goes into effect in 2013, it will increase the top tax rate on capital gains, dividends, and other investment income, regardless of whether the 2001 and 2003 tax cuts are allowed to expire. Almost all the burden will be borne by taxpayers with extremely high incomes. More than half the burden, for example, falls on taxpayers in the top 0.1 percent of the income distribution.

Urban Institute Launches Infrastructure Initiative Led by Transportation Scholar Sandra Rosenbloom

paffairs@urban.org ( Urban Institute ) — Fri, 27 Jan 2012 00:00:00 EST

A multidimensional research initiative spanning America's fragile infrastructure systems debuts today at the Urban Institute with transportation planning expert Sandra Rosenbloom as its director.

Has Foreclosure Counseling Helped Troubled Homeowners? : Evidence from the Evaluation of the National Foreclosure Mitigation Counseling Program

Fri, 27 Jan 2012 00:00:00 EST

The National Foreclosure Mitigation Counseling (NFMC) program is a special federal appropriation, administered by NeighborWorks America, designed to support a rapid expansion of foreclosure intervention counseling in response to the nationwide housing crisis. This brief summarizes the final results of the Urban Institutes evaluation of the first two rounds of the NFMC program. Overall, the program is having its intended effect of helping troubled homeowners by improving the quality of mortgage modifications, increasing the frequency and sustainability of cures of delinquencies and foreclosures, and reducing the number of foreclosure completions for counseled homeowners.

America Owes $10 Trillion! No, $50 Trillion! Let Me Explain.

paffairs@urban.org ( Donald Marron ) — Fri, 27 Jan 2012 00:00:00 EST

In a contribution to the Christian Science Monitor, Donald Marron discusses the estimates of America's debt which vary by tens of trillions of dollars, depending on how you count. The bottom line: It's deep but not yet fatal.

The Tax Debate: How the Democrats Play, Too, and Often Win

paffairs@urban.org ( C. Eugene Steuerle ) — Thu, 26 Jan 2012 00:00:00 EST

Republicans typically emphasize lower taxes, while casting Democrats as eager to further burden hard-working families. But Republicans delude themselves when they think that Democrats can't play the tax-cutting game as well.

Tax Rates on Capital Gains

paffairs@urban.org ( Roberton Williams ) — Wed, 25 Jan 2012 00:00:00 EST

Tax rates on capital gains have fluctuated over the past century, sometimes matching the rates for ordinary income but more often substantially below them. The current top gains tax rate is 15 percent, less than half the 35 percent top rate on ordinary income and lower than at any time since the depression. But if Congress does not change the law, the expiration of the Bush-era tax cuts and imposition of taxes associated with the 2010 healthcare legislation will boost the maximum tax rate on gains to 25 percent in 2013.

Controlling the Deficit: The Debate Continues

paffairs@urban.org ( John L. Palmer, Rudolph G. Penner ) — Fri, 20 Jan 2012 00:00:00 EST

The report discusses the important budget events of 2011. It begins with the House Republican budget and the president's response. The very different approaches to health and discretionary spending and tax policy are analyzed in detail. The policy debate continued into the confused debt limit negotiations of July. The Budget Control Act finally emerged. It capped discretionary spending and created a "super committee" that was to propose additional deficit reductions. The committee failed miserably. An automatic across-the-board spending cut is supposed to result from that failure. The report describes its effects on defense and nondefense spending.

Funding and Investing in Infrastructure

paffairs@urban.org ( Michael A. Pagano ) — Wed, 18 Jan 2012 00:00:00 EST

Funding and investing in infrastructure are not only about finding adequate resources to meet the demands of citizenry, but rather requires understanding of how infrastructure fits into the broader functions of government. This brief examines the key role of pricing infrastructure projects and how the total cost of a project (including lifetime maintenance costs) should be included in funding decisions. Current federal and state policies often encourage new building rather than maintenance and care of existing infrastructure. The role of public-private partnerships in infrastructure projects is also sometimes more about political rather than economic considerations. The author presents options to better coordinate infrastructure financing and payments across levels of government.

Too Much of a Good Thing? Own Revenues and the Political Economy of Intergovernmental Finance Reform: The Albanian Case

paffairs@urban.org ( Anthony Levitas ) — Tue, 10 Jan 2012 00:00:00 EST

Decentralization projects in developing and transitional countries are typically accompanied by efforts to increase the own-revenue powers of local governments. Both the literature of fiscal federalism and the practices of donors and domestic reformers often see the strengthening these powers as critically important to the success of local government reform initiatives. The recent history of Albanian intergovernmental finance reform, however, suggests that there can be too much of a good thing: Placing the enhancement of local government tax powers at the center of decentralization projects can not only crowd outtheoretically and practicallycritically important efforts to develop stable, predictable, and adequate transfer systems, but can also be politically self-blocking. In this paper, we use the Albanian case to illustrate why in developing countries with highly skewed tax bases there are good reasons to focus first on stabilizing transfer systems, and only secondarily on expanding local government own-revenue powers.

International Competitiveness : Who Competes against Whom and for What?

paffairs@urban.org ( Eric Toder ) — Tue, 10 Jan 2012 00:00:00 EST

Political leaders and commentators frequently claim that the policies they favor will make the United States more competitive, without defining what competiveness between countries means. This paper defines competitiveness as a contest between nations for scarce and mobile resources and explores how different tax policies may help or hinder efforts to attract high-skilled labor, capital investment, and headquarters of multinational corporations. While these inputs contribute to living standards, elevating competition for them into a final goal of policy instead of a consideration that must be weighed against costs of tax policies that attract them could lead to seriously flawed policies.

Exploring the Measurement and Effectiveness of the Local Public Sector : Toward a Classification of Local Public Sector Finances and a Comparison of Devolved and Deconcentrated Finances

paffairs@urban.org ( Jameson Boex ) — Fri, 06 Jan 2012 00:00:00 EST

Over the past 10 years, the international development community has often treated decentralization and local governance issues through a narrow lens, focusing exclusively on the devolution of financial resources within the context of elected local governments. This paper seeks to define a more detailed metric of (local) public sector finances, which recognizes that the central authorities in each country interact with residents, civil society, and the private sector in three ways: through the direct or delegated delivery of public services (by central government entities); through deconcentrated departments or jurisdictions; and/or through devolved local governments. Formulating a detailed methodology for measuring local public sector finances will serve as a foundation to better understanding of the production function of public sector outputs and outcomes.

National Foreclosure Mitigation Counseling Program Evaluation: Final Report Rounds 1 and 2

Fri, 06 Jan 2012 00:00:00 EST

The National Foreclosure Mitigation Counseling (NFMC) program is a special federal appropriation, administered by NeighborWorks America, designed to support a rapid expansion of foreclosure intervention counseling in response to the nationwide housing crisis. This report presents the final results of the Urban Institutes evaluation of the first two rounds of the NFMC program. Overall, the program is having its intended effect of helping troubled homeowners by improving the quality of mortgage modifications, increasing the frequency and sustainability of cures of delinquencies and foreclosures, and reducing the number of foreclosure completions for counseled homeowners.

Retirement Account Balances (Updated 1/12)

paffairs@urban.org ( Barbara Butrica, Philip Issa ) — Thu, 05 Jan 2012 00:00:00 EST

The retirement savings of American households took a big hit when the stock market crashed in 2008. Recently, however, a good portion of these losses has been reversed. This fact sheet follows trends in retirement account balances since the beginning of 2005.

The Economics of Compassion

paffairs@urban.org ( C. Eugene Steuerle ) — Thu, 05 Jan 2012 00:00:00 EST

A new year offers new hope, so lets pause to ask who and what makes this world a better place.

Twelve Days of Christmas Hopes for Tough Economy, Deadlocked Congress

paffairs@urban.org ( Donald Marron ) — Thu, 22 Dec 2011 00:00:00 EST

In a contribution to the Christian Science Monitor, Donald Marron discusses hopes for the global economy and the political leaders struggling to keep it on an even keel.

Sarah Rosen Wartell, Think Tank Executive and Housing Finance Expert, to be the Urban Institute's Third President

paffairs@urban.org ( Urban Institute ) — Tue, 20 Dec 2011 00:00:00 EST

Sarah Rosen Wartell, a public policy executive and housing markets expert who co-founded the Center for American Progress (CAP) and serves as its executive vice president, will become the third president of the Urban Institute at the end of February.

Teddy Roosevelt Redux?

paffairs@urban.org ( C. Eugene Steuerle ) — Wed, 14 Dec 2011 00:00:00 EST

The debate over the relationship between government and the rich has been part of every presidential contest for more than a century. But myths and misunderstandings pervade attempts to compare 2012 and 1910 with policy prescriptions in mind. Chief among the myths propagated by both political parties is that, for better or worse, larger and more engaged government has come about through taxing the rich.

Composition of Tax-Deductible Charitable Contributions

paffairs@urban.org ( Joseph Rosenberg ) — Tue, 13 Dec 2011 00:00:00 EST

Taxpayers who elect to itemize can claim a deduction against federal income tax liability for contributions made to registered charitable organizations. While cash gifts still account for the vast majority of charitable donations reported on tax returns, gifts of noncash property have grown as a share of total contributions. Gifts of corporate stock, mutual funds, and other investments account for the largest share of noncash donations and are almost exclusively reported by high-income taxpayers.

Tough Times, Creative Measures: What Will it Take to Help the Social Sector Embrace an Outcomes Culture?

paffairs@urban.org ( Urban Institute, Venture Philanthropy Partners ) — Tue, 13 Dec 2011 00:00:00 EST

Sparked by the publication of Leap of Reason by Mario Morino, this symposium convened a select group of twenty leaders from government, nonprofits, philanthropy, and business to discuss a challenge that has limited the collective impact of the social sector: the lack of encouragement and support in the nonprofit community for disciplined, data-driven management. The symposium explored barriers to and opportunities for making performance management more common in the social sector. Participants discussed possible solutions that would advance performance management, including the Outcome and Effective Practices Portal (now called PerformWell), an online resource for nonprofits seeking assistance with identifying indicators and tools to measure their outcomes.

Late Fall 2011 Nonprofit Fundraising Study

paffairs@urban.org ( Urban Institute, Additional Authors ) — Mon, 12 Dec 2011 00:00:00 EST

Nonprofits report being "cut to the bone" in their budgets and fundraising results have not improved over the past year. Nonprofit organizations, particularly smaller entities, are struggling to secure funding for the vital services they provide in their communities. The Late Fall 2011 Nonprofit Fundraising Study examines fundraising results and their implications for organizational operations, and alerts managers and donors alike to consider the priorities facing the nonprofit sector in 2012 and beyond. The survey represents a unique collaboration by the Urban Institute's National Center for Charitable Statistics with Indiana University's Center on Philanthropy, the Association of Fundraising Professionals, Giving USA Foundation, Blackbaud, and GuideStar.

The Property Tax Exemption for Nonprofits and Revenue Implications for Cities

paffairs@urban.org ( Daphne A. Kenyon, Adam H. Langley ) — Fri, 09 Dec 2011 00:00:00 EST

The charitable property tax exemption can have significant revenue implications for municipalities with large nonprofit sectors and heavy reliance on the property tax. Interest in policies to offset these revenue implications has grown because of the growth of the nonprofit sector in recent decades and the fiscal crisis currently facing many local governments. This policy brief discusses some of these policies, including nonprofit payments in lieu of taxes (PILOTs), municipal service fees, heavier reliance on user fees and special assessments, in-kind contributions from nonprofits, state aid to municipalities hosting tax-exempt nonprofits, and local control over the charitable property tax exemption.

Do Low-Income Workers Benefit from 401(k) Plans? (Full Report)

paffairs@urban.org ( Eric Toder, Karen E. Smith ) — Fri, 09 Dec 2011 00:00:00 EST

Economists frequently assume that employees pay for employer-provided fringe benefits, such as contributions to retirement plans, in the form of reduced wages. This paper challenges these assumptions. Because low-income employees receive little tax benefit from saving in qualified retirement plans, they may not be willing to accept a one dollar reduction in their wage in return for an additional dollar contributed to their 401(k) plan. We find that employers reduce wages of high-income workers by 90 to 99 cents for every dollar contributed to a 401(k) plan, but they reduce wages of low-income workers by only 11 to 29 cents.

Asset Management: An International Perspective

paffairs@urban.org ( Olga Kaganova ) — Fri, 09 Dec 2011 00:00:00 EST

This commentary reflects on a profound impact that the fiscal crisis has on management of public property and overall lack of advanced asset management practices at local governments even though 65-99 percent of the value of the wealth owned on the taxpayers' behalf is concentrated in public land, built-up property and infrastructure.

Do Low-Income Workers Benefit from 401(k) Plans? (Brief)

paffairs@urban.org ( Eric Toder, Karen E. Smith ) — Fri, 09 Dec 2011 00:00:00 EST

Wealth, Realized Income, and the Measure of Well-Being

paffairs@urban.org ( C. Eugene Steuerle ) — Thu, 08 Dec 2011 00:00:00 EST

Realized income is a widely accepted measure of well-being. This paper examines the relationship between realized income and wealth and economic income, using a national sample of income tax returns matched with estate tax returns to compare the realized property income of individuals with the with the associated amount of wealth that generates that income. The study demonstrates that with respect to those who hold a significant amount of wealth, realized income is an extremely poor measure of well-being. This leads to inequity in tax and welfare programs. Finally, this study illustrates the usefulness of estate-income collation in studying wealth-income relationships.

Unemployment Insurance and the Great Recession

paffairs@urban.org ( Wayne Vroman ) — Wed, 07 Dec 2011 00:00:00 EST

This issue brief examines the unprecedented funding problem of state unemployment insurance (UI) programs. The majority of UI programs (36 of 53) have borrowed, securing record loan amounts to maintain unemployment insurance benefit payments during 2009-2011. It identifies the causes of the funding problem, discusses borrowing options for states and describes policy responses at both the state and federal levels. State actions have included both tax increases and benefit reductions. Federal policy proposals have addressed the low UI taxable wage base in most states and have offered partial debt forgiveness in return for state actions to improve solvency. To date, policy actions have been slow at both the state and federal levels of government.

Social Impact Bonds: Key Implementation Issues

paffairs@urban.org ( P. Mitchell Downey, John Roman ) — Mon, 05 Dec 2011 00:00:00 EST

State and local governments often struggle to implement evidence-based programs because of high upfront costs, even when research shows these programs to be cost-effective in the long run. Social impact bonds (SIBs) are an innovative way of attracting private funding for program implementation by offering a financial return to investors. But can social impact bonds really be used in the US to increase evidence-based programming? In this presentation, we present some key ideas behind social impact bonds, discuss challenges in getting them off the ground, and show how ongoing Urban Institute work can be used to establish the SIB market.

Unemployment Insurance and the Great Recession

paffairs@urban.org ( Wayne Vroman ) — Mon, 28 Nov 2011 00:00:00 EST

This paper examines the unprecedented funding problem of state unemployment insurance (UI) programs. The majority of UI programs (36 of 53) have borrowed, securing record loan amounts to maintain unemployment insurance benefit payments during 2009-2011. It identifies the causes of the funding problem, discusses borrowing options for states and describes policy responses at both the state and federal levels. State actions have included both tax increases and benefit reductions. Federal policy proposals have addressed the low UI taxable wage base in most states and have offered partial debt forgiveness in return for state actions to improve solvency. To date, policy actions have been slow at both the state and federal levels of government.

Evaluation Design for the Next Phase Evaluation of the Assets for Independence Program, Final Literature Review

Mon, 07 Nov 2011 00:00:00 EST

Based on our review and synthesis of the individual development account (IDA) literature, findings in this report include that IDA accounts (in the short-term, five years after program entry) help low-income families become homeowners, start or expand a business, or pursue secondary education. Studies to date have found no relationship between IDA program participation and net worth. The report reviews empirical evidence on the effect of IDA program participation and project design features on outcomes and highlights remaining gaps in the literature.

Who are Low-Asset Low-Income Families?

paffairs@urban.org ( Mauricio Soto ) — Mon, 07 Nov 2011 00:00:00 EST

More than a quarter of U.S. families are in the bottom 40 percent of both the net worth and the income distributions. For these families, neither assets nor income offers much protection against financial shocks. This fact sheet describes the characteristics of these families. Low-asset low-income families tend to be younger, single, less educated, in poorer health, and minority.

Impact & Influence: The Role of Local Jurisdictions in Managing Prison Population Size

paffairs@urban.org ( Elizabeth Davies ) — Thu, 03 Nov 2011 00:00:00 EST

This white paper discusses how state efforts to reduce the growth of prison populations can affect local criminal justice systems. Although these state strategies which typically focus on policies governing sentencing, inmate release and transfer, and supervision violation response - have the potential to greatly benefit both the offender and the community, they can strain the resources and capacity of jails, supervision officers, and community-based providers. Likewise, local actors may respond to these strategies with policies and practices that conflict with state prison population management efforts. Recommendations on how state and local stakeholders can avoid these unintended outcomes are provided.

What's Been Happening to Charitable Giving Recently? A Look at the Data.

Tue, 01 Nov 2011 00:00:00 EST

This brief attempts to access the trends in charitable giving and how the current economic turmoil has affected the nonprofit sector - the main topic of an August 2011 roundtable hosted by the Tax Policy and Charities project at the Urban Institute. Twenty-five experts on tax policy and the nonprofit sector convened to discuss past trends in giving, the charitable sector's current situation, and the possible effects of proposals to modify the charitable deduction.

Tax Reform: Lessons From History

paffairs@urban.org ( C. Eugene Steuerle ) — Thu, 20 Oct 2011 00:00:00 EST

This article was published as part of the Tax Note series "The Legacy of the TRA '86." As current budget pressure forces us to consider tax reform as a means of raising revenue, past reforms provide us some valuable lessons. Reforms typically begin with a consensus that something is broken and that while we disagree on the perfect solution, no one favors the unequal justice, inefficiency, or complexity in our tax code. It was that type of bipartisan agreement that led to past successful tax reforms, such as in 1986, 1969, and 1954. Similar ideas are relevant today.

Reprinted with permission from Tax Analysts

The Tax Treatment of Charities & Major Budget Reform : Testimony Before the Committee on Finance United States Senate

paffairs@urban.org ( C. Eugene Steuerle ) — Tue, 18 Oct 2011 00:00:00 EST

Eugene Steuerle testifies before the Senate Finance Committee on "Tax Reform Options: Incentives for Charitable Giving," presenting options on how to increase tax revenues with minimal impact or perhaps even an increase in charitable giving. Among other recommendations, he suggests a floor under charitable giving, improved compliance measures, greater restrictions on non-cash gifts, a better system of information reporting, allowing taxpayers to immediately deduct contributions they make while filing their tax returns, extending the deduction to taxpayers who don't itemize, raising the ceiling on allowed charitable giving for some types of gifts, and reforming the foundation excise tax.

Measuring the Social Value of Postal Services: Progress Report and Results

paffairs@urban.org ( Nancy M. Pindus ) — Mon, 26 Sep 2011 00:00:00 EST

This slide presentation summarizes work undertaken for the Postal Regulatory Commission to examine various aspects of the social value of postal services to the nation: 1) the economic benefits of post offices; 2) the transportation and price leadership role of the Postal Service for parcels, expedited services, money orders, and post office boxes; and 3) community safety and public safety benefits from the presence of letter carriers and post offices. The first two studies were completed; the third was not completed due to budgetary cutbacks.

Studies of Social and Commercial Benefits of Postal Services: Economic Effects of Post Offices

paffairs@urban.org ( Christopher Hayes, Chris Narducci, Nancy M. Pindus ) — Mon, 26 Sep 2011 00:00:00 EST

Does the closing of a post office have negative effects on the economic indicators of the surrounding community?This study uses a difference-in-differences approach to assess the economic impact of a post office closure on a community. We compared employment and number of business establishments in communities with a post office to similar communities where a post office has been closed between 2002 and 2005.While the results do not provide conclusive evidence of economic impact, they do suggest a small, sometimes significant, negative impact on employment in the ZIP codes with post office closures.

Changing the Budget Process

paffairs@urban.org ( Rudolph G. Penner ) — Wed, 21 Sep 2011 00:00:00 EST

Rudolph Penner's testimony before the House Committee on the Budget on proposals for changing the budget process.

A Jobs Plan We Can Afford

paffairs@urban.org ( Robert I. Lerman ) — Mon, 19 Sep 2011 00:00:00 EST

This brief lays out a feasible, cost-effective strategy for job creation.It would create 4 million new jobs at a budget cost of less than $60 billion and is far more affordable and effective than President Obamas $448 billion proposal to create up to 2.1 million jobs.Lermans five plan components include expanding energy development, increasing demand for owner-occupied housing through homeownership vouchers and refinancing, a generous tax credit for expanding employment, an expansion of apprenticeship training, and direct job creation.These components would likely stimulate enough jobs to reduce the unemployment rate from 9.1% to 5.5%.

Workshop on State Poverty Measurement Using the American Community Survey

paffairs@urban.org ( David Betson, Linda Giannarelli, Sheila R. Zedlewski ) — Tue, 13 Sep 2011 00:00:00 EST

This workshop discussed issues surrounding the potential development of a Supplemental Poverty Measure (SPM) at the state level using the American Community Survey (ACS).Academics and researchers from around the country participated, including experts that have implemented the SPM for eight different areas. The discussion summarized recent experiences and challenges in implementing the SPM on the ACS and geographic adjustments to the poverty thresholds. The summary highlights the key issues and ideas for next steps.

How Lifetime Benefits and Contributions Point the Way Toward Reforming Our Senior Entitlement Programs

paffairs@urban.org ( C. Eugene Steuerle, Stephanie Rennane ) — Wed, 07 Sep 2011 00:00:00 EST

The Congress, the President, and various commissions have begun discussing real Social Security, Medicare, and Medicaid reform.This paper suggests that as these discussions move forward, it would be helpful to examine lifetime contributions and benefits for Medicare and Social Security to understand the programs internal fiscal situations and their broader role in overall budget policy and, most importantly, as a way toward a more unified and coherent approach to entitlement reform for seniors. This approach also provides a useful window on how equitably lifetime benefits and taxes are distributed and on the fiscal stability of the overall system.

Is Poverty Incompatible with Asset Accumulation?

Fri, 02 Sep 2011 00:00:00 EST

Is poverty incompatible with asset accumulation? We examine whether the poor can and do save and whether they are able to build up assets over time. Data are presented from household surveys, as well as from programs targeted at helping families accumulate assets. Presenting and evaluating the state of knowledge provides a new lens on whether the current income-based safety net could better serve poor families by having an asset building component. Conventional thinking is that families that are income poor cannot save. This chapter shows that this thinking is inaccurate; poverty does not have to be incompatible with asset accumulation.

Options to Reform the Deduction for Home Mortgage Interest

paffairs@urban.org ( Daniel Baneman, Hang Nguyen, Jeff Rohaly, Eric Toder ) — Tue, 16 Aug 2011 00:00:00 EST

Currently, taxpayers can deduct interest on up to $1 million in acquisition debt used to buy, build, or improve their primary residence or a second designated residence. In addition, taxpayers can deduct interest on up to $100,000 in home equity loans or other loans secured by their properties regardless of the loans purpose. We consider a proposal that would limit the amount of deductible interest to the amount incurred on the first $500,000 of debt on a primary residence only, and would replace the itemized deduction with a nonrefundable tax credit equal to 15 percent of eligible home mortgage interest.

The Effects of the Safety Net on Child Poverty in Three States

Mon, 15 Aug 2011 00:00:00 EST

In 2008, safety net programs cut child poverty in half in Georgia, Illinois, and Massachusetts. Federal programs that provide the same benefit across the country reduce poverty more in lower housing cost states such as Georgia than in higher cost states such as Massachusetts. Massachusetts's generous TANF policy has a greater impact on child poverty than the TANF policies in the other two states. Estimates are produced using the Supplemental Poverty Measure.

Private Transfers, Race, and Wealth

Fri, 12 Aug 2011 00:00:00 EST

How do private transfers differ by race and ethnicity and do such differences explain the racial and ethnic disparity in wealth? Using the Panel Study of Income Dynamics, this study examines private transfers by race and ethnicity and explores a causal relationship between private transfers and wealth. We examine private transfers in the form of financial support received and given from extended families and friends, as well as large gifts and inheritances. Our findings highlight important differences in private transfers by race and ethnicity: African Americans and Hispanics (both immigrant and nonimmigrant) receive less in private transfers than non-Hispanic whites.

Fiscal Rules for Restraining Federal Overspending : Before the Joint Economic Committee, United States Congress

paffairs@urban.org ( Robert D. Reischauer ) — Wed, 27 Jul 2011 00:00:00 EST

On July 27, 2011, Urban Institute President Robert Reischauer gave testimony to the Congressional Joint Economic Committee on how fiscal rules can restrain federal overspending.

Kids' Share 2011

Thu, 21 Jul 2011 00:00:00 EST

Kids' Share 2011: Report on Federal Expenditures on Children through 2010, a fifth annual report, looks comprehensively at trends over the past 50 years in federal spending and tax expenditures on children. Key findings suggest that the size and composition of expenditures on children have changed considerably, but children have not been a budget priority. Federal expenditures on children in 2010, were 11 percent of the federal budget, slightly higher than in 2009.This increase is temporary, however, with the children's share of the budget expected to shrink to less than 8 percent by the end of the next decade.