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.
One of Biden’s tax proposals that has gotten little attention is a change that would shift the benefits of tax deferral in traditional retirement accounts toward lower- and middle-income earners. The plan would reduce the tax benefit for those earning above $80,250 but under $400,000, violating Biden’s tax pledge to not raise taxes on earners below the $400,000 threshold.
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Biden’s tax vision is twofold: higher taxes on high-income earners and businesses paired with more generous provisions for specific activities and households.
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California is home to 7 of the 10 most expensive metro areas in America. See what’s the real value of $100 in your metro area with our new purchasing power map.
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On Thursday, U.S. Senators Marco Rubio (R-FL), Bill Cassidy (R-LA), Steve Daines (R-MT), and Mitt Romney (R-UT) released the Coronavirus Assistance for American Families Act (CAAF), which would provide payments of $1,000 to adults and children with Social Security numbers, subject to income limits used in the original round of rebates. Among other modifications, it would be more generous to households and families with children when compared to the original rebates distributed under the CARES Act.
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A resurgence in coronavirus cases and receding economic activity in many states threaten the nascent economic recovery. To address the ongoing crisis, the Senate Republican Phase 4 proposal builds on the CARES Act provisions while modifying others, including a scaled down federal UI benefit.
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Reviewing the sources of personal income shows that the personal income tax is largely a tax on labor, primarily because our personal income is mostly derived from labor. However, varied sources of capital income also play a role in American incomes.
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As concern over American competitiveness and onshoring of innovative activity increases, presidential candidates and policymakers should keep in mind the tax increases scheduled to take effect in the coming years, including the amortization of R&D and phaseout of the broader expensing provisions.
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Cost recovery is the way the tax code permits firms to recover (or deduct) the cost of making investments. Cost recovery plays an important role in defining a business’ taxable income and can impact investment decisions.
The size and scope of the tax changes within the CARES Act created significant administrative challenges for the IRS. Lawmakers should prioritize simplicity in the next round of relief.
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Our analysis shows that the economic benefits of federal investment in productivity-enhancing infrastructure may be undercut by the negative effects of the financing of those investments, such as when the corporate income tax is increased.
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As lawmakers explore options for “Phase 4” coronavirus relief legislation, one idea that has received renewed attention is allowing businesses to cash out business tax credits. This proposal would be strengthened by also permitting acceleration of firms’ accrued net operating loss (NOL) deductions and designing the proposal so that firms can quickly convert these tax assets into cash.
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What are the best tax policies to encourage a smooth transition and strong economic recovery? How should goals of economic recovery and growth be balanced with revenue needs?
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Rather than find ways to restrict net operating loss (NOL) carrybacks, lawmakers should focus on ways to improve liquidity by cashing out accrued NOLs, which would benefit startups and new small businesses without taxable income to offset in prior years.
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The HEROES Act, the $3 trillion relief package proposed by House Democrats, is the first bid to provide additional phase 4 aid for businesses and individuals amid the coronavirus pandemic.
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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 about 30 percent of their wages in taxes.
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Policymakers will have to consider design options for accelerating NOL deductions to ensure the refunds are simple, provide targeted relief to struggling firms, and are consistent with long-run revenue needs.
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The sooner federal policymakers or regulators clarify tax questions about the Paycheck Protection Program (PPP), the more certainty firms will have when they accept the economic relief to keep their businesses afloat.
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In addition to providing economic relief to individuals and loans to businesses struggling during the coronavirus crisis, the CARES Act changed several tax provisions to increase liquidity to ensure firms survive a large decline in cash flow.
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