Some 40 years ago, the U.S. dealt with high inflation and slow economic growth. Then as now, the solution is a long-term focus on stronger economic growth and sustainable federal budgets.
Dr. William McBride is the Vice President of Federal Tax Policy & Stephen J. Entin Fellow in Economics at the Tax Foundation, where he leads our efforts to research, model, and reform the U.S. tax code.
Dr. McBride has more than ten years of experience analyzing a variety of economic and policy issues. Prior to his current role at the Tax Foundation, he served as a manager in the National Economic and Statistics (NES) group at PricewaterhouseCoopers where he worked on numerous projects, including economic impact analyses, industry surveys, U.S. federal and state tax revenue estimates, and general quantitative analyses. He also has experience researching and modeling the economics of taxation and issues related to tax reform at the state, federal, and international levels.
Dr. McBride is no stranger to the Tax Foundation. From 2011 to 2015 he served as chief economist, where he wrote extensively on the economics of taxation, particularly regarding business investment, and guided the development of the Tax Foundation dynamic scoring model.
Dr. McBride holds a PhD in economics from George Mason University, where he specialized in macroeconomics and agent-based modeling. His research has been cited by policymakers, quoted by major media outlets, including The Wall Street Journal and The New York Times, and published in scholarly journals, such as the National Tax Journal and Tax Notes.
Total tax collections are currently running 25 percent higher than last year, and if that pattern holds, total federal tax collections will reach over $5 trillion in FY 2022—a new all-time high.
The FY 2023 budget proposes several new tax increases, which in combination with the Build Back Better Act, would give the U.S. the highest top tax rates on individual and corporate income in the developed world.
By reducing the tax code’s current barriers to investment and saving and simplifying its complex rules, lawmakers would greatly enhance the ability of Americans to pursue new ideas, create more opportunities, and build financial security for themselves and their families.
Consumer prices rose by 7 percent in 2021, the highest annual rate of inflation since 1982. Where did this inflation come from and what might its impacts be? Tax and fiscal policy offer important clues.
Tax extenders this year can be split into three rough groups: expiring parts of the Tax Cuts and Jobs Act (TCJA), expiring parts of various COVID-19 economic relief packages, and the Island of Misfit Extenders.
Policymakers and taxpayers should understand the scope of tax changes necessary to fully pay for the large-scale social spending programs that would be initiated under the Build Back Better Act.
Learn more about the House Build Back Better Act, including the latest details and analysis of the Biden tax increases and reconciliation bill tax proposals.
When looking at the tax burden on businesses over time, it is important to provide a complete picture by accounting for the different types of businesses in the U.S. and the timing effects of the 2017 tax law. Doing so provides important context on existing tax burdens and for considering the impact of raising taxes on corporations and pass-through firms.
Under the latest iteration of the House Build Back Better Act (BBBA), the average top tax rate on personal income would reach 57.4 percent, giving the U.S. the highest rate in the Organisation for Economic Co-operation and Development (OECD).
With corporate and individual rate hikes potentially out of the Build Back Better (BBB) reconciliation package, lawmakers are weighing alternative options to raise revenue. Rather than come up with untested proposals and complicated changes to the tax base, they should prioritize options that raise revenue while improving the structure of the tax code.
This year’s robust corporate tax collections calls into question efforts by the administration and congressional Democrats to increase the corporate tax rate and raise other corporate taxes based on claims of relatively low tax collections following the Tax Cuts and Jobs Act (TCJA) in 2017.
Tax Foundation testimony at the Joint Economic Committee hearing on the revenue provisions in the Build Back Better Act and related analysis on their estimated impact.
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.
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.
Top Tax Rate on Pass-through Business Income Would Exceed 50 Percent in Most States Under House Dems’ Plan
Under the House Democrats’ reconciliation plan, the top tax rate on pass-through business income would exceed 50 percent in most states. Pass-through businesses, such as sole proprietorships, S corporations, and partnerships, make up a majority of businesses and majority of private sector employment in the United States.
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.
The proposed restructuring of the GILTI and FDII regimes makes several changes to the tax base that are largely offsetting, leaving virtually all the revenue potential to be determined by the tax rates on GILTI and FDII and the haircuts on foreign tax credits. Lawmakers should carefully weigh the trade-offs between higher tax revenues and competitiveness.
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.