Tax Policy Blog

HEROES Act Dependent Expansions Come with Major Drawbacks

The HEROES Act adds to the confusion and instability already inherent in the tax code with multiple expiring provisions and reduced filing guidelines.

More Than Half the States Will Protect Businesses from Certain COVID-19-Related Unemployment Insurance Tax Hikes

Lawmakers can help expedite their state’s economic recovery by protecting employers from facing higher unemployment insurance tax rates at a time when they can least afford to pay them.

HEROES Act Temporarily Increases Dependent Credit Generosity

The HEROES Act would make notable expansions to all three dependent-related credits, increasing maximum credit amounts, refundability, and income eligibility phaseouts. Practically, this means that certain filers could expect to receive a larger refund for each additional hour of work, eligible dependent, and dependent care expenses if the bill became law.

Breaking Down State and Local Aid under the SMART Act

The SMART Act, sponsored by Senators Bob Menendez and Bill Cassidy and Rep. Mikie Sherrill, would provide $500 billion in flexible funding to state and local governments.

Neutral Cost Recovery Is Not a New Idea

As stated by Rep. Jack Kemp in 1985, “Neutral cost recovery is designed to provide the present value of investment expensing without some of its practical problems.”

Empirical Evidence Shows Expensing Leads to More Investment and Higher Employment

The Tax Foundation’s General Equilibrium Model suggests that allowing businesses to immediately deduct or “expense” their capital investments in the year in which they are purchased delivers the biggest bang for the buck in spurring economic growth and jobs compared to other tax policies.

Louisiana Considers Temporary Suspension of Part of Corporation Franchise Tax

State recovery plans should lessen the burden on businesses by shifting from capital stock taxes and other taxes that are charged regardless of profitability. Louisiana does well to target its Corporation Franchise Tax, a burdensome tax that would target businesses that may already be struggling.

HEROES Act First Bid to Provide Phase 4 Relief for Businesses and Individuals

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.

Accounting for Deficits: When Should They Matter and How Should We Solve It?

Revenue shortfalls and deficits can be addressed best by considering when to consider the deficit as the primary priority and reevaluating how revenue can be raised most efficiently through sound tax policy principles.

Under the HEROES Act, State Budgets Could Soar as the Economy Suffers

The HEROES Act, proposed by House Democrats as a next round of fiscal relief during the coronavirus outbreak, contains about $1.08 trillion in aid to states and localities. That would bring the pandemic total to $1.63 trillion—an amount so large that it might overwhelm their ability to spend it and could reward fiscal irresponsibility.

How the HEROES Act Would Allocate State and Local Aid for Coronavirus Relief

The HEROES Act would provide more than $1 trillion to state and local governments. Here’s how funding would be distributed and provisional estimates of how much aid each state would receive.

California the Latest to Propose Higher Vapor Taxes

Reducing the Bias Against Long-term Investments

Other countries have shown that providing deductions in line with invested capital costs can have positive impacts both on investment and on debt bias.

Alabama, Missouri Bills Would Exempt CARES Relief from Income Tax Calculation

Alabama and Missouri are considering excluding the CARES Act Economic Impact Payments from being taxed and exclude them from state income tax calculations.

Gov. Hogan Vetoes Maryland Digital Advertising Tax Legislation

Gov. Hogan vetoed a proposed first-in-the-nation digital advertising tax that would have imposed rates of up to 10 percent on digital advertising served to Marylanders.

Watch: Coronavirus: A Path to Economic Recovery

What challenges should we expect to face as the U.S. economy begins to re-open? When is the right time for legislators to start focusing on long-term recovery vs. short-term needs? What policies should federal legislators pursue to clear a path to recovery?

White House Considers Neutral Cost Recovery for Structures

When considering long-term policies for increasing long-run levels of investment and economic growth, full expensing and neutral cost recovery are better targeted than policies like a capital gains cut.

Chaos to the Left of Me. Chaos to the Right of me.

The OECD recently announced that the negotiation timeline for new digital tax proposals has now been pushed back to October due to the COVID-19 pandemic, although the end-of-year deadline for the overall project is still in place.

Treasury Audit Highlights the Need for Clearer Eligibility Guidelines for the EITC

Reviewing the Economic and Revenue Implications of Cost Recovery Options

Permanent full expensing for all types of investment is an effective policy change lawmakers can use to encourage additional investment and economic growth.