Any move to repeal the cap or enhance the deduction would disproportionately benefit higher earners, making the tax code more regressive.
Garrett Watson is Senior Policy Analyst and Modeling Manager at the Tax Foundation, where he conducts research on federal and state tax policy. His work has been featured in The Washington Post, The Atlantic, Politico, the Associated Press and other major outlets.
Previously, Garrett was a program manager at a nearby think tank and conducted policy research on economic opportunity and labor markets, including non-compete clause reform.
Garrett earned a bachelor’s degree from St. Lawrence University in upstate New York, where he studied economics and philosophy. Garrett lives in northwest Arkansas and is an avid hockey fan and snowboarder.
As Congress continues its work on the fiscal year 2024 appropriations process and associated tax provisions, it should consider an often-overlooked tax provision: the limitation on deductions companies take for interest payments.
A major case pending before the U.S. Supreme Court (Moore v. United States) is calling into question provisions on large portions of the U.S. tax base which could quickly become legally uncertain, putting significant revenue at stake.
Starting on September 1st, federal student loan payments will resume after a three-and-a-half-year pause on payments and accrued interest following the onset of the COVID-19 pandemic.
Details and analysis of the latest House GOP tax plan, the American Families and Jobs Act. Learn more about the House Republican tax plan.
The federal tax code remains a major source of frustration and controversy for Americans, and a hindrance to economic growth and opportunity. Other countries, such as Estonia, have proven that sufficient tax revenue can be collected in a less frustrating and more efficient way.
According to our analysis, President Biden’s budget would reduce long-run economic output by about 1.3 percent and eliminate 335,000 FTE jobs. See what tax policies the president is proposing.
President Biden’s new budget proposal outlines several major tax increases targeted at businesses and high-income individuals that would bring U.S. income tax rates far out of step with international norms.
Reforming the Low-Income Housing Tax Credit (LIHTC) and providing neutral cost recovery for residential structures would tackle the problem of housing affordability in a complementary fashion.
Adopting a distributed profits tax would greatly simplify U.S. business taxes, reduce marginal tax rates on investment, and renew our country’s commitment to pro-growth tax policy.
While hoping for inflation’s continued decline, policymakers should finish the job and index the tax code to prepare for future bouts of high inflation and as a contingency in case it takes longer to defeat elevated inflation than expected.
The FairTax is a proposal to replace all major sources of the federal government’s revenue—the individual income tax, corporate income tax, estate and gift taxes, and payroll tax—with a national sales tax and rebate, abolishing the IRS in the process.
A combination of long-standing IRS operational deficiencies, the agency’s temporary closure due to the pandemic, and the now-expired pandemic relief produced a perfect recipe for a paper backlog.
Lawmakers should use the most comprehensive analytical tools available to them—like dynamic scoring—to make informed decisions about policy changes.
Newly published data from the CBO indicates in 2019, before the onset of the pandemic, American incomes continued to rise as part of a broad economic expansion. It also shows that, contrary to common perceptions, the federal tax system is progressive.
The year-end omnibus federal spending package makes a number of reforms to retirement savings accounts.
Lawmakers should recognize both the growing importance of business R&D and the need to support it through a commonsense tax policy, namely a return to full and immediate expensing for R&D.
Tighter Limits on U.S. Interest Deductibility Make U.S. an Outlier and Increase Pain of Rising Interest Rates
While there is disagreement about the amount of interest that should be deductible, it’s clear that the limit based on EBIT makes the U.S. an outlier compared to other countries across the OECD while raising the cost of new investment.
Two weeks after the 2022 midterm elections, it’s becoming clearer where tax policy may be headed for the rest of the year and into 2023. In the short term, Congress must deal with tax extenders and expiring business tax provisions that may undermine the economy.
Policymakers face a difficult balancing act this year in what is likely to be an unusual tax extenders season.