For nearly a decade, federal higher education subsidies have increasingly been delivered through the tax code rather than through direct spending programs such as grants, loan subsidies, and work study. This paper reviews the results of using new modules in the TRIM and Tax Policy Center microsimulation models to estimate the distributional impacts and expenditure and revenue effects of major federal higher education tax and spending policies.

The leading policy goal for 401(k)-type plans and Individual Retirement Accounts is to help families accumulate wealth for retirement. Given this objective, policy-makers have created tax penalties for either withdrawing funds too quickly or too slowly. This Tax Fact explores these tax penalties, and shows that the share of all returns with a penalty has risen steadily over the past decade.

The IRS does not administer well items for which it does not have information reporting. Extending information reporting to most charitable contributions would simplify life for most individual givers, improve compliance, and likely be better for the charitable sector as well. An improved information reporting for charitable contributions goes hand-in-hand with the continually improving systems of accounting that accompany the advances of information technology.

Some of the costliest tax expenditures the federal government allows go to subsidizing homeownership. In 2004, the total tax expenditure value of the mortgage interest deduction was $70.2 billion while the value for the real estate tax deduction was $19.3 billion. Fifty-four percent of these sums went to taxpayers at or above $100,000 of income and 72 percent went to taxpayers at or above $75,000.