Tax Policy Blog

States Projected to Post Higher Marijuana Revenues in 2021

Comparing Three Financing Options for President Biden’s Spending Proposals

While Congress continues to debate how to pay for President Biden’s spending proposals in the fiscal year 2022 budget, it is useful to consider the economic impact of a range of financing options in addition to the President’s proposed tax increases.

Corporate Tax Revenue Forecasted as Robust following the 2017 Tax Reform

In light of these forecasts, which could be revised upwards further given the pace of growth in the economy and corporate profits, it seems clear that the 2017 tax reform did not substantially reduce the revenue potential of the corporate tax.

Here’s How Louisiana’s Tax Plan Would Simplify the Tax Code and Benefit Residents

Louisiana legislators passed a tax reform plan that has received overwhelming support in both the House and Senate, but voters will get the ultimate say on whether that plan succeeds. In light of this, it may be valuable to walk through what is included in these reforms and what effect the changes will have on taxpayers.

The Bipartisan Infrastructure Plan Avoids Tax Increases, Undermines User-Pay Principle, and Misses Chance to Modernize Obsolete Programs

The good news is that lawmakers avoided raising taxes to cover the cost of the new spending and instead used some reasonable fees and asset sales. The bad news is that half of the offsets come from unused, debt-financed COVID-19 relief funds and the economic return on many of these investments is questionable.

How Did We Ever Agree to Fund Infrastructure Investments?

As lawmakers explore funding mechanisms for additional federal infrastructure investment, they should focus on permanent, sustainable, and transparent revenue options that conform to the benefit principle. Permanent user fees, appropriately adjusted to restore and maintain their purchasing power, would serve as ideal revenue sources for federal infrastructure investments.

D.C.’s Income Tax Hike Helps Maryland and Virginia, Not D.C.

Even as lawmakers in eleven states have cut income taxes this year, the D.C. Council has responded to surpluses and growth by voting to include substantial income tax increases in the budget.

Amortization Deductions for Sports Teams Properly Part of the Income Tax System

The media has reported on how wealthy taxpayers who own sports teams lower their tax liability by deducting the cost of purchasing a sports team over 15 years. Contrary to claims that deducting the cost of a sports team from taxable income is a “loophole,” such deductions are a normal and proper part of the income tax system.

Survey Shows Growing Tax Complexity for Multinationals

New data clearly points to an increase in tax complexity for multinationals in the OECD as well as globally. The OECD’s ongoing efforts to reform the international tax system will likely further add complexity to the international tax environment.

North Carolina Considers Corporate Income Tax Repeal and Individual Income Tax Relief

Taken together, the proposed reforms would further solidify North Carolina’s position as a leader in sound tax policy and as a state whose tax code is among the most conducive to generating long-term economic growth.

Illuminating the Hidden Costs of State Tax Incentives

In most states, tax incentives abound, usually offered as a way of promoting new investment or attracting certain industries by shielding them from the full impact of otherwise high tax rates.

Intellectual Property Came Back to U.S. after Tax Reform, but Proposals Could Change That

Intellectual property is a key driver in the current economy. Among other things, intellectual property includes patents for life-saving drugs and vaccines and software that runs applications on phones and computers.

Households Earning $75,000 or Less Paid Majority of Individual Mandate Penalties

Last month, the Supreme Court turned back a challenge to the Affordable Care Act (ACA), allowing to stand the Individual Mandate it created that penalizes taxpayers for not having proper health insurance and opening the way for President Biden and Congress to reimplement it.

Dynamic Scoring of Infrastructure Spending Proposals Offsets Small Portion of the Cost

While it is good that policymakers are taking the impact of the economy on tax revenue seriously, it is important to remember that the dynamic effect of increased spending would only offset a small portion of the total spending. In other words, new spending—like tax cuts—rarely pays for itself.

How Biden’s Business Tax Proposals Would Impact Taxpayers Across States

The Biden administration has targeted U.S. businesses, including corporations and passthrough entities, to raise revenue to fund new spending. However, individual taxpayers across America will end up footing the bill.

IRS Sends Nearly $15 Billion of Advance Child Tax Credit Payments

New Treasury Department data released on the advance Child Tax Credit payments shows the distribution by state, including how much, on average, households in each state received. The expansion will only be in effect for the 2021 tax year—if policymakers wish to continue providing the increased benefits, they must address the administrative and revenue costs of the policy.

Cutting the Cord from Cable Has States Courting New Revenue Streams

If states wish to tax digital streaming and download services, they should do it the right way, by including them in their sales tax base—preferably as part of broader reforms paired with commensurate rate reductions—rather than inventing new excise taxes or shoehorning taxation of the new economy into outdated statutes.

Even Within States, Tax Treatment Differs by Industry

States can enhance tax neutrality across industries by reforming tax structures that penalize certain business activity, leaning less on generous incentives, and focusing more on creating a tax code that provides for low and competitive burdens for all comers.

Piling on the GILTI Verdicts

The Biden administration has proposed to significantly increase the tax burden on foreign income through a policy known as Global Intangible Low-Tax Income (GILTI). While the administration’s rhetoric focuses on doubling the tax rate on GILTI from 10.5 percent to 21 percent, this is less than half the story.

New Research Suggests Estimates of Wealth Inequality Likely Overstated

New research from Federal Reserve Bank of Boston economists suggests wealth inequality has grown less than previously estimated and that shares of wealth held by top earners drops significantly when accounting for sources of lower- and middle-class wealth that are often overlooked.