Unless lawmakers act, 2022 will be the first of several years that the U.S. tax system automatically changes for the worse.
Daniel Bunn is President and CEO of the Tax Foundation. Daniel has been with the organization since 2018 and, prior to becoming President, successfully built its Center for Global Tax Policy, expanding the Tax Foundation’s reach and impact around the world.
Prior to joining the Tax Foundation, Daniel worked in the United States Senate at the Joint Economic Committee as part of Senator Mike Lee’s (R-UT) Social Capital Project and on the policy staff for both Senator Lee and Senator Tim Scott (R-SC). In his time in the Senate, Daniel developed legislative initiatives on tax, trade, regulatory, and budget policy.
He has a master’s degree in Economic Policy from Central European University in Budapest, Hungary, and a bachelor’s degree in Business Administration from North Greenville University in South Carolina.
Daniel lives in Halethorpe, Maryland, with his wife and their three children.
While there are many factors that affect a country’s economic performance, taxes play an important role. A well-structured tax code is easy for taxpayers to comply with and can promote economic development while raising sufficient revenue for a government’s priorities.
For many years, the UK has adopted a strikingly ungenerous approach to capital cost recovery – the ability of firms to write off investment against tax. This has coincided with consistently low levels of business investment. The super-deduction, which has temporarily made the UK tax system much more supportive of capital investment in plant and machinery is set to expire.
Carryover tax provisions help businesses “smooth” their risk and income, making the tax code more neutral across investments and over time.
In an already-challenging economic environment, new UK Prime Minister Liz Truss must get tax rates correct to avoid over-burdening a population and business sector facing immense uncertainty. Focusing only on rates while ignoring the base misses an opportunity for real, pro-growth reform.
With continued concerns over inflation, individuals may be wondering how their tax bills will be impacted. Less than half of OECD countries in Europe automatically adjust income tax brackets for inflation every year.
The phaseout of 100 percent bonus depreciation, scheduled to take place after the end of 2022, will increase the after-tax cost of investment in the U.S. Permanently extending it would increase long-run economic output by 0.4 percent and increase employment by 73,000 FTE jobs.
Patent box regimes (also referred to as intellectual property, or IP, regimes) provide lower effective tax rates on income derived from IP. Most commonly, eligible types of IP are patents and software copyrights. Currently, 13 of the 27 EU member states have a patent box regime.
Pillar One Amount A is meant to reallocate taxable profits of large multinationals, mitigate double taxation of profits, and avoid a harmful tax and trade war.
About half of all European OECD countries have either announced, proposed, or implemented a digital services tax.
Over the course of the last year, it has become clear that Democratic lawmakers want to change U.S. tax rules for large companies. However, as proposals have been debated in recent months, there are have been clear divides between U.S. proposals and the global minimum tax rules.
While the global minimum tax gets much attention in the media, there is another significant piece to the deal.
Congress should prioritize evaluation of recent international tax trends and the model rules and adjust U.S. rules in a way that supports investment and innovation and moves towards simplicity.
To make the taxation of labor more efficient, policymakers should understand the inputs into the tax wedge, and taxpayers should understand how their tax burden funds government services.
Although the U.S. has a progressive tax system and a relatively low tax burden compared to the OECD average, average-wage workers still pay nearly 30 percent of their wages in taxes.
The Biden administration has been supportive of the negotiations, but the changes should be reviewed in the context of recent policy changes in the U.S. and elsewhere, the general landscape of business taxation in the U.S., and potential challenges and risks arising from the global tax deal.
Treasury Secretary Janet Yellen offered estimates from the EU Tax Observatory as evidence that the Polish government would benefit from supporting the global tax deal. Unfortunately, evidence was, at best, out of date.
The ongoing economic uncertainty from the COVID-19 pandemic, supply chain disruptions, and current inflationary pressures have highlighted the importance of investment.
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 been debated in recent months, there are clear divides between U.S. proposals and the global minimum tax rules.