Stay informed with quick and accessible analysis of today's top tax policy topics. Read Tax Foundation's Tax Policy Blog for insight from our experts on tax policies across the U.S. and abroad.
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Over the course of the last year, it has become clear that Democratic lawmakers want to change U.S. international tax rules. However, as proposals have surfaced in recent weeks, there are clear divides among various proposals.
5 min read
The White House Council of Economic Advisors (CEA)’s recent report estimates the average federal individual income tax rate for the top 400 wealthiest households in the U.S to be 8.2 percent, lower than typically estimated for top earners.
4 min read
The Spanish Regional Tax Competitiveness Index allows policymakers, businesses, and taxpayers to evaluate and measure how their regions’ tax systems compare and serves as a road map for policymakers to reform their tax systems and make their regions more competitive and attractive for entrepreneurs and residents.
7 min read
The latest version of the Biden Build Back Better agenda, released last week by the House Ways and Means committee, is dense, with too many provisions to flesh out completely. Here’s a rundown of the good, the bad, and the ugly of it.
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The potential federal tax increase of over 1,600 percent on dipping tobacco as a result of the House Democrats’ proposal could result in state taxes and retail prices increasing by more than 50 percent in certain states.
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Under the Ways and Means text, the U.S. would have an average corporate tax rate of 30.9 percent, which would be the third-highest corporate tax rate in the OECD, behind only Colombia and Portugal.
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A VAT tax reform that eliminates VAT reduced rates would decrease compliance costs and allow for a more rapid economic recovery. Policymakers should focus on simplifying VAT rules and making them more efficient and neutral by broadening their tax bases and eliminating reduced rates and unnecessary tax exemptions.
4 min read
House Democrats’ newly released $3.5 trillion tax legislation includes a tax increase on tobacco, nicotine, and vapor products levied on tobacco manufacturers. But ultimately it would fall heavily on tobacco consumers—many of the group that earns less than $400,000 that President Biden pledged would not see a tax increase.
6 min read
Research shows that a tax on stock buybacks would not be the right policy solution to encourage long-term investment or lift wages.
3 min read
Whether spurred by a belief that government is improperly favoring religious institutions, an antipathy to wealthy celebrity pastors, or a hope that taxing houses of worship could bring down personal tax bills, the taxation of religious bodies is hotly debated online, but barely on the radar of actual elected officials. But is that true? How much, if any, tax revenue is forgone, and what do the policies look like?
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The Biden administration does have a point about how some components of the infrastructure bill could put downward pressure on inflation in the long term. However, the taxes chosen to pay for those investments would counteract those effects, by reducing investment and productivity growth.
4 min read
Earlier this year, Maryland legislators overrode Governor Larry Hogan’s (R) veto of HB732, approving a digital advertising tax, the first of its kind in the country. But legislators punted several crucial questions to the state comptroller, who last week submitted proposed regulations for the digital advertising tax to the state Joint Committee on Administrative, Executive, and Legislative Review.
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Rather than pursuing policies that have demonstrably reduced R&D and innovation elsewhere, and that would disincentivize R&D in the U.S., lawmakers should continue to ensure an ecosystem that encourages risk-taking and R&D.
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As Congress prepares to rewrite some portion of the current international tax rules, it’s hoped that they are able to achieve a more principled approach and one that is not so subject to obfuscation and misinterpretation.
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Lawmakers are considering policy changes within the reconciliation bill that would reduce private R&D within the pharmaceutical industry and reduce the number of new drugs coming to market. Instead of hampering medical progress, policymakers should work to ensure that the tax code remains conducive to R&D spending and the resulting innovation.
5 min read
Congressional lawmakers are putting together a reconciliation bill to enact much of President Biden’s Build Back Better agenda. Many lawmakers including Senate Finance Committee Chair Ron Wyden (D-OR), however, want to make their own mark on the legislation.
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Mark-to-market is not simple to implement, as it involves new administrative and compliance challenges for taxpayers. Mark-to-market levies tax on phantom income, requiring some taxpayers to engage in some degree of liquidation, ultimately suppressing incentives to save and invest. The limited tax revenues that could result from these proposals are not worth the risk.
5 min read
Over the next ten years, the structure of the Child Tax Credit (CTC) is scheduled to change, complicating efforts to extend enhanced CTC benefits or reform the CTC for the long-term. Rather than take an all-or-nothing approach or kick the can down the road by relying on temporary expansions, lawmakers could consider alternative options that better target low-income households, retain work incentives, reduce the impact on federal revenue, and provide taxpayers with a stable, consistent tax code.
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As lawmakers are reviewing international tax rules and determining what to change and update, they should pay attention to the way GILTI interacts with profitable and loss-making companies.
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While the excise tax penalty in H.R. 3 is referred to as a 95 percent tax rate, it actually amounts to a 1,900 percent tax rate because of how the proposal defines the tax base. In other words, under the H.R. 3 tax penalty, a drug that sells for $100 would incur a $1,900 tax.
3 min read