Max Sawicky

Max B. Sawicky is an economist for the Economic Policy Institute. He has worked in the Office of State and Local Finance of the U.S. Treasury Department and the U.S. Advisory Commission on Intergovernmental Relations.

Mr. Sawicky has studied and written about the economics of public finance, including the federal budget, tax policy, the U.S. federal system, state and local finance, privatization, and welfare reform. His reports for the Economic Policy Institute include: "The Roots of the Public Sector Fiscal Crisis"; "The Poverty of the New Paradigm"; and "Up From Deficit Reduction." He is a co-author (with Craig Richards and Rima Shore) of Risky Business: Private Management of Public Schools, and editor of The End of Welfare? Consequences of Federal Devolution for the Nation.

Mr. Sawicky has been a contributor to USA Today, Newsday, the Newark Star-Ledger, the Austin-American Statesman, the San Diego News-Tribune, the Cincinatti Enquirer, the Houston Chronicle, the Dayton Daily News, In These Times, Challenge, the Progressive Populist, Dollars and Sense, Dissent, Aging Today, Social Policy, Jobs and Capital, Education Digest, the School Administrator, Social Forces, Intellectual Capital, the Review of Radical Political Economics, New Economy, and the New Zealand Journal of Industrial Relations. He is an at-large national board member of Americans for Democratic Action.

Mr. Sawicky received a Ph.D. from the University of Maryland at College Park. He currently resides with his wife and daughter in Silver Spring, Maryland.

Recent Articles

Errors Of Commission

The President's Advisory Panel on Tax Reform is about to disgorge its recommendations. Early reports suggest that it will push for three general changes: Simplify the individual income tax by reducing or eliminating the Alternative Minimum Tax (AMT) and some deductions; Increase the exclusion of investment income from tax; Consolidate tax benefits for working families with children. The malignant pattern underlying the first two priorities is an increasing shift of the tax burden to labor compensation used by working people to finance basic needs -- in other words, to tax nothing but the wages that most people use to finance consumption. Simplify This Itemized deductions in the income tax are widely thought to be middle-class benefits. But while they are broadly distributed, their value increases with income; the higher your tax bracket, the greater your savings and the more you're likely to pay in mortgage interest, state income tax, and so on. Although itemized deductions are...

The Easy Money

The Internal Revenue Service estimates that some $350 billion in taxes owed to the federal government is evaded or otherwise unpaid every year. That sum, also known as the “tax gap,” nearly equals the current federal budget deficit. Of this $350 billion, enforcement efforts eventually recover about $43 billion -- and much more could be collected if the nation's tax-enforcement system were permitted to operate more effectively. Most of the tax gap stems from underreporting of net income -- reporting too little income or too much in the way of expenses -- under the individual income tax. The type of income in question is mostly business income to proprietors, partnerships, “S-corporations,” ordinary corporations, and the self-employed, as well as capital income (like dividends and capital gains) to individuals. A lesser part of it derives from wages and salary. Noncompliance with tax law takes other forms, too, such as the failure to file in the first place and underpayment of stated tax...

Debt and Taxes

The long-term insolvency of President George W. Bush's budget strategy is obscured by outrage -- otherwise justified -- over gratuitous and spiteful spending cuts. These cuts are real enough, but they are the battle the Bush administration would prefer to fight. To an important extent, the cuts are targeted at politically vulnerable populations. What the administration would prefer we ignore is the longer-term unsustainability of their policies, which also endanger our largest, most important, and popular entitlement programs. The fundamental problem is that federal revenues now are below 17 percent of the gross domestic product; since 2003, that proportion has been at its lowest since the 1950s. At the same time, total outlays are over 20 percent of GDP. That gap of three percentage points is sufficient to cause federal debt to rise more rapidly than GDP itself, generating a rising debt burden. The simple arithmetic: Debt as a share of GDP is now 38 percent. With the Congressional...

Why Pay Down the Public Debt?

Y our taxonomist and my friend, Robert McIntyre, has offered us a lesson on the merits of paying down public debt [" In Praise of Debt Reduction ," September 11, 2000]. Everyone knows Bob's work on tax policy is invaluable, but his class on fiscal policy is one I'd rather cut. Bob begins with the reasonable point that in a highemployment economy, budget surpluses could curb inflation and cool the Federal Reserve's ardor for higher interest rates. But he ducks two crucial issues: how much of a surplus to run, and for how long. His failure to take exception to the Clinton-Gore policy suggests that his preference is for as much and as long as possible, short of shutting down the "entire government for a few years." Little inflation is in sight. Who is to say unemployment could not decline further? Extreme humility in this vein is warranted. For decades fiscal policy has labored under the delusion that unemployment could never fall beneath 6 percent...

It Takes a Tax Credit to Raise a Child

W ith some creative expansion, the Earned Income Tax Credit (EITC) could all but end poverty among working-class families with children and help a lot of middle-class parents as well. The EITC is now this country's second-largest means-tested program that aids the poor. (Medicaid is the largest.) It goes primarily to families that have children and survive on low income derived from employment. The credit costs more than $30 billion a year and is popular enough to encourage efforts to expand it. Because the EITC is essentially a refund of payroll tax withholdings, families who owe little or no federal income tax can benefit. For the many low-income families in this category, credits that are not refunds (such as those for child care expenses) are not very helpful. Consider a single mom with two children: In 1999 her standard deduction was $6,350, and she got three exemptions at $2,750 each, for a total of $14,600 in tax-free income. But...