Tax Policy Blog

Three-Fourths of New 2016 Investment Was Excluded from Improved Cost Recovery

New data sheds light on what share of new business investment was eligible for bonus depreciation as it existed before 2017 tax reform, and what share of new investment was excluded from improved cost recovery. This matters because the income tax is biased against investment in capital assets to the extent that it makes the investor wait years or decades to claim the cost of machines, equipment, or factories on their tax returns.

Senate Republicans Introduce the HEALS Act for Coronavirus Pandemic Relief

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.

Revenue Gains in Asian and Pacific Countries Likely Offset by COVID-19

Because of the COVID-19 pandemic and the associated economic crisis, countries in the Asia-Pacific region will see a differentiated impact on their capacity of mobilizing domestic revenue depending on the structure of their economy. According to the OECD report, those economies that rely mostly on natural resources, tourism, and trade taxes are especially vulnerable.

New York and New Jersey Consider Financial Transaction Taxes

Seeking new sources of funding, New York and New Jersey—two states at the heart of global financial markets—are considering financial transaction taxes.

Austria Is Mulling an Allowance for Corporate Equity

While not a short-term measure to alleviate the economic losses resulting from the current crisis, experience from other countries has shown that a tax allowance for corporate equity can be a sensible long-term policy that can strengthen Austria’s investment environment and improve financial stability.

The History of Excess Profits Taxes Not as Effective or Harmless as Today’s Advocates Portray

Today’s advocates would do well to study the history of excess profits taxes before overselling these taxes as a solution to the COVID-19 crisis.

The New EU Budget is Light on Details of Tax Proposals

The European Council recently agreed on a new multiannual budget and a recovery program, which sets EU budget levels for 2021-2027 totals €1 trillion (US $1.2 trillion). The lack of details on the various tax proposals and the eventual need for revenue sources to finance new EU debt mean there is a lot of work left for policymakers in Brussels to do.

Debunking 3 Myths About the Mortgage Interest Deduction

(Webinar) Figuring Out Phase Four: Next Steps on Federal and State Coronavirus Response

As U.S. businesses struggle to recover from the economic downturn, Congress and the White House continue to debate a phase four relief package, which could include anything from incentives for domestic travel and a payroll tax cut to more fundamental reforms like enacting permanent full cost recovery.

Tax Options to Promote Short-Term Recovery and Long-Term Economic Growth in Wisconsin

From a revenue standpoint, Wisconsin was better off than many states going into this crisis, but the policy decisions—including tax policy decisions—state policymakers make in the months ahead will have far-reaching implications for how quickly jobs and wages are restored in Wisconsin.

Financial Transaction Tax Could Hit Average Spanish

Spain is planning to implement two major taxes during the next few months, a digital services tax and a financial transaction tax, which have the potential to negatively impact capital formation, growth, and economic recovery and start a harmful trade war.

Hungarian COVID-19 Response: Surtax for Banks and Retail

Hungary is the only EU state to have actually implemented COVID-19 tax hikes.

Attracting Manufacturing to the U.S. Should Start with Neutral Tax Treatment, Not Subsidies

Before considering industry-specific laws and subsidies for onshoring, policymakers should make sure the U.S. tax code is not biased against domestic investment in the first place.

Future of Wisconsin Vapor Tax Uncertain after Decision by State Supreme Court

Biden’s Plan to Boost Research and Development Should Include Cancellation of Upcoming R&D Amortization

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.

Digital Taxes, Meet Handbag Tariffs

The USTR announced new tariffs in response to the French digital services tax of 25% on $1.3 billion worth of goods. The tariffs would apply to several make-up products, handbags, and assorted soaps.

Non-Profit Files Lawsuit over Withholding Requirements in Ohio

As work increasingly takes place in home offices, states will have to grapple with the revenue implications, and may find it necessary to adopt policies to better compete with outlying areas. Taxing people in places in which they no longer work, however, will not be the solution.

Improved Cost Recovery Is A Wide-Ranging Policy Solution

Rather than limit improvements to certain sectors, lawmakers could pursue a broader policy of full expensing for all capital investment and neutral cost recovery for structures and clear the tax policy hurdles that currently stand in the way of private investment.

Peruvian “Solidarity Tax” Unlikely to Offset Deficit Spending

While it is important that Peru find ways to offset its deficit spending, a temporary wealth tax may introduce more problems than it solves.

FAQ on Neutral Cost Recovery and Expensing

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.