Overview of the Federal Tax System and Its Effect in 2008

Source: U.S. Congress, Joint Committee on Taxation

The Senate Committee on Finance has scheduled a public hearing for April 15, 2008, entitled “Tax: Fundamentals in Advance of Reform.” This document,1 prepared by the staff of the Joint Committee on Taxation, provides a summary of the present-law Federal tax system as in effect for 2008.

The current Federal tax system has four main elements: (1) an income tax on individuals and corporations (which consists of both a “regular” income tax and an alternative minimum tax); (2) payroll taxes on wages (and corresponding taxes on self-employment income); (3) estate, gift, and generation-skipping transfer taxes, and (4) excise taxes on selected goods and services. This document provides a broad overview of each of these elements.2 A number of aspects of the Federal tax laws are subject to change over time. For example, some dollar amounts and income thresholds are indexed for inflation. The standard deduction, tax rate brackets, and the annual gift tax exclusion are examples of amounts that are indexed for inflation. In general, the Internal Revenue Service adjusts these numbers annually and publishes the inflation adjusted amounts in effect for a tax year prior to the beginning of that year. Where applicable, this document generally includes dollar amounts in effect for 2008 and notes whether dollar amounts are indexed for inflation.

In addition, a number of the provisions in the Federal tax laws have been enacted on a temporary basis or have parameters that vary by statute from year to year. For example, the Tax Relief and Health Care Act of 2006 extended a number of expired or soon to expire provisions on a temporary basis. In addition, many of the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 initially were to expire at the end of 2010; some provisions of that Act have been modified subsequently or made permanent. For simplicity, this document describes the Federal tax laws in effect in 2008 and generally does not include references to provisions as they may be in effect for future years or to termination dates for expiring provisions. A list of expiring tax provisions may be found in Joint Committee on Taxation, List of Expiring Federal Tax Provisions 2007-2020, (JCX-1-08), January 11, 2008.

Full report (PDF; 101 KB)

The REAL ID Act of 2005: Legal, Regulatory, and Implementation Issues

Source: Congressional Research Service (via Federation of American Scientists)

In 2005, Congress addressed the issue of national standards for drivers’ licenses and personal identification cards by passing The REAL ID Act of 2005 (REAL ID). The act contains a number of provisions relating to improved security for drivers’ licenses and personal identification cards, as well as instructions for states that do not comply with its provisions. In general, while REAL ID does not directly impose federal standards with respect to states’ issuance of drivers’ licenses and personal identification cards, states nevertheless appear compelled to adopt such standards and modify any conflicting laws or regulations to continue to have such documents recognized by federal agencies for official purposes.

Both at the time that REAL ID was debated in Congress, and during the regulatory comment period, questions about the constitutionality of the statute have been raised. There have been four main constitutional arguments made against REAL ID. First, because REAL ID cannot be premised on Congress’s power to regulate interstate commerce, it is a violation of states’ rights as protected by the Tenth Amendment. Second, the requirement that REAL IDs be used to board federally regulated aircraft impermissibly encroaches on citizens’ right to travel. Third, specific requirements such as the digital photograph potentially violate the Free Exercise Clause of the First Amendment. Finally, REAL ID infringes upon a citizen’s right under the First Amendment to freely assemble, associate, and petition the government.

Since its adoption in 2005, REAL ID has been a highly contested issue among state legislatures and governors. According to some advocacy groups, state and federal elected officials — including numerous commentators to the proposed regulations — and other interested parties, REAL ID imposes an unconstitutional “unfunded mandate” on the states. Prior to the publication of the proposed rule in 2007, however, there was little activity at the state-lawmaking level, primarily because officials were uncertain as to precisely what the implementation requirements were going to necessitate, either in terms of cost or potential changes to state law. Since the publication of the proposed rule in 2007, there has been a dramatic increase in state responses to REAL ID and its requirements. The final regulations were promulgated by the Department of Homeland Security (DHS) on January 29, 2008, and contain 280 pages of explanation as well as responses to over 21,000 comments. This report contains a summary description and analysis of several of the major elements of the REAL ID regulations.

Finally, this report will address REAL ID in relationship to other federal laws and identification programs. This report will be updated as events warrant.

Full report (PDF; 209 KB)

The Workforce Evolution: Recruiting and Retaining State IT Employees

Source: National Association of State Chief Information Officers (NASCIO)

An upcoming shortage of state IT government workers is predicted by many to be evident and quickly approaching. As the state IT workforce begins to face the challenges of a potential worker shortage, and as it evolves to reflect the modern workforce of the future, employee recruitment and retention tactics must be examined in order to attract and retain top IT talent. A product of NASCIO’s State IT Workforce Working Group, this brief focuses on these recruitment and retention tactics for state CIOs by examining traditional and innovative recruitment strategies, successful retention initiatives and state best practices in each of these areas. By taking steps to augment a potential state IT worker shortage, state CIOs will be better prepared to face these challenges as they arise.

Full report (PDF: 800 KB)

Health Care Work Force Too Small, Unprepared For Aging Baby Boomers; Higher Pay, More Training, And Changes In Care Delivery Needed To Avert Crisis

Source: Institute of Medicine (National Academies)

From news release:
As the first of the nation’s 78 million baby boomers begin reaching age 65 in 2011, they will face a health care work force that is too small and woefully unprepared to meet their specific health needs, says a new report from the Institute of Medicine. The report, Retooling for an Aging America: Building the Health Care Workforce, calls for bold initiatives starting immediately to train all health care providers in the basics of geriatric care and to prepare family members and other informal caregivers, who currently receive little or no training in how to tend to their aging loved ones. Medicare, Medicaid, and other health plans should pay higher rates to boost recruitment and retention of geriatric specialists and care aides, said the committee that wrote the report.

The committee set a target date of 2030 — the year by which all baby boomers will have turned 65 or older — for the necessary reforms to take place.

Full Report (Read for free online.)
Project website

Campus Law Enforcement, 2004-05

Source: Bureau of Justice Statistics

From abstract:
Presents findings from a BJS survey of campus law enforcement agencies serving 4-year colleges and universities with 2,500 or more students. The survey covered the 2004-05 academic year and collected data from agencies using sworn police officers and those using only nonsworn security officers. The report compares law enforcement agencies serving public and private campuses by number and type of employees, screening methods used for hiring officers, training and education requirements for officers, agency functions, types of equipment, computers and information systems, special programs, and written policy directives. General campus characteristics, including crime statistics, are also summarized. Appendix tables include data from 2-year public colleges with an enrollment of 10,000 or more.

Full Report (PDF; 191 KB)

Employment Situation of Veterans

Source: Bureau of Labor Statistics

From Summary:
In 2007, the unemployment rate among veterans who served in the U.S. Armed Forces since September 2001 was 6.1 percent, the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor reported today. About 17 percent of these veterans, also called Gulf War-era II veterans, had a service-connected disability in August 2007. The jobless rate for veterans of all eras combined was 3.8 percent in 2007. About 12 percent of all veterans had a service-connected disability in August 2007.

Full report

Older Americans 2008: Key Indicators of Well-Being

Source: National Institute on Aging/National Center for Health Statistics

From press release (Word; 606 KB):
Average life expectancy continues to increase, and today’s older Americans enjoy better health and financial security than any previous generation. However, rates of gain are inconsistent between the genders and across age brackets, income levels and racial and ethnic groups. Some critical disparities also exist between older Americans and older people in other industrialized countries. These and other trends are reported in Older Americans 2008: Key Indicators of Well-Being, a unique, comprehensive look at aging in the United States from the Federal Interagency Forum on Aging-Related Statistics.

Report (various sections/formats)
PowerPoint slides of charts
Excel spreadsheets

Unions and Upward Mobility for African-American Workers

Source: Center for Economic and Policy Research

Press release:
This paper examines the impact of unionization on the pay and benefits of African-American workers. The most recent data suggest that even after controlling for differences between union and non-union workers –including such factors as age and education level– unionization substantially improves the pay and benefits received by black workers.

On average, unionization raised black workers’ wages 12 percent -about $2.00 per hour- relative to black workers with similar characteristics who were not in unions.

The union impact on health-insurance and pension coverage was even larger. African-American workers who were in unions were 16 percentage points more likely to have employer-provided health insurance and 19 percentage points more likely to have a pension plan than similar non-union workers.

These union effects are large by any measure. To put these findings into perspective, between 1996 and 2000, a period of sustained, low unemployment that helped to produce the best wage growth for low-wage workers in the last three decades, the real wage of 10th percentile workers (who make more than 10 percent of workers, but less than 90 percent of workers), rose, in total, about 12 percent. The 12-percent union wage boost for black workers, therefore, was equal in magnitude to four years of historically rapid real wage growth.

Over the same boom period in the 1990s, employer-provided health and pension coverage among the bottom fifth of workers rose only about three percentage points for health insurance (up 3.2 percentage points) and pensions (up 2.7 percent) – only about one-fifth of the impact of unionization on health-insurance coverage and about one-sixth of the impact on pension coverage for African Americans.

The benefits of unionization were even higher for black workers in typically low-wage occupations. Black workers in unions in otherwise low-wage occupations earned, on average, 14 percent more than their non-union counterparts. Unionized black workers in low-wage occupations were also 20 percentage points more likely than comparable non-union workers to have employer-provided health insurance, and 28 percentage points more likely to have a pension plan.

Full report (PDF; 174 KB)

Employer Health Insurance Costs and Worker Compensation

Source: Kaiser Family Foundation

Health insurance premiums have increased rapidly over the recent past, growing a cumulative 78 percent between 2001 and 2007 and far outpacing cumulative wage growth of 19 percent over the same period.1 These figures, which have been widely cited to demonstrate the growing burden of health insurance costs on employers and employees, illustrate overall trends in health benefit costs, but they do not show how this growing burden is affecting employers and employees in different settings. To address this issue, this analysis shows employer costs for payroll and health benefits over a six-year period for workers in different occupations and at different establishment sizes.

Our analysis focuses on employer costs for health insurance for workers with access to health benefits. Employer costs for health insurance increased significantly as a percentage of payroll between 1999 and 2005, and varied meaningfully across the workforce when viewed as cost per hour worked or as a percentage of payroll. Employer costs per hour for health insurance were higher for workers in higher wage occupations than for workers in lower wage occupations, but overall employer costs represented a lower percentage of payrolls for workers in high wage occupations than for workers in low wage occupations.

Workers Show Record Drop in Retirement Confidence, Health Care and Economy Are Major Concerns

Source: Employee Benefit Research Institute

From the press release:
Reflecting the growing concern over health care costs and economic issues, American workers’ confidence in being able to afford a comfortable retirement decreased over the past year by a rate unmatched in the 18 years of the Retirement Confidence Survey(RCS), according to results released today.

The percentage of workers very confident about having enough money for a comfortable retirement decreased sharply, from 27 percent in 2007 to 18 percent in 2008, the biggest one-year drop in the 18-year history of the survey. Retiree confidence in having a financially secure retirement also decreased, from 41 percent to 29 percent, a drop of 12 percentage points. Decreases in confidence occurred across all age groups and income levels but was particularly acute among younger workers and those with lower income.
RCS results indicate health costs in particular have become a big concern for retirees: Among retirees who left the work force earlier than planned, more than half (54 percent) say they did so because of health problems or disability. Almost half of retirees (44 percent) say they have spent more than expected on health care expenses. More than half of retirees (54 per- cent) say they are now more concerned about their financial future than they were right after they retired, a 14 percentage- point increase from a year ago (40 percent in 2007).

“In the nearly two decades we have been conducting the RCS, this year’s results show a very dramatic reduction in the public’s confidence about having a comfortable retirement. The economy and health costs are major concerns,” said Dallas Salisbury, president of the nonpartisan Employee Benefit Research Institute (EBRI), which conducted the survey with Mathew Greenwald & Associates. “If there is abeing able to afford retirement.”

Full Issue Brief (PDF; 432 KB)