SB 8610: GAIN Act Thread II (Tabled)

[Mr. Reactionary]

Not sure what's going on with this, since it's been more than 2 weeks since anyone has posted, but here's a Tax Policy Center cost analysis for a variety of different EITC increase proposals.

The relevant portion of the table is option (f), which describes the increases outlined in the real Brown-Khanna proposal: "Option increases the credit phase-in rates to 30%, 65.28%, 76.80%, and 86.40% for those with 0,1,2, and 3 children, respectively. Proposal also increases the end of phase-in and the beginning of phase-out income thresholds, and phase-out rate of childless workers to 15.98%, the same as for workers with one child. Finally, proposal reduces their eligibility age from 25 to 21."

This shows that the total cost for FY2019 would be 141.6 billion dollars, and the cost over 10 years (FY2017-26) would be 1.385 trillion dollars.

As for the tax increases, it's difficult to say how much that would affect revenue. The 2018 Atlasian budget numbers are not broken down by bracket, so I'm not sure what I should be using as a reference here. I've done a few estimates and it seems from a very preliminary estimate that the bill does in fact pass paygo, as the tax increases outlined in the bill would generate around 170 billion dollars in extra revenue. However, there are large error bars on this estimate (+/- 40 billion) and I will try to do a more detailed analysis later.

(Here's the link to the Brown-Khanna bill, since the table in the OP is very difficult to read, and here's the link to the relevant portions of the tax code)

I'll just post this here even though progress seems to have stagnated on this bill:

Now that the tax revenue numbers are complete, a more detailed cost analysis is in order. As it turns out, the initial estimate that I posted a few weeks ago was way off. 100 billion dollars off, in fact. My new analysis shows that the tax increases outlined in this bill would only generate, at most, 73.9 +/- 5 billion dollars in new revenues, only half of the cost estimate of the RL bill (141 billion dollars).

Now here's a fun fact: in order to fund this bill in its current form, the current top marginal tax bracket would have to be taxed at a rate of 78.8%.

Another fun fact: even if the top two marginal tax rates were increased to 100%, the resulting new revenues would total 327 billion dollars, only about 60% of the current projected deficit, and only 2.3 times the per-year cost of the Brown-Khanna bill. Ultimately, not enough people make up the top two tax brackets for 'tax the rich' solutions to work as an effective source of new revenues; if income tax increases are to be used as such, then the lower bracket rates would have to be upped as well.