Learning About Tax Policy

The Tax Foundation is the nation’s leading independent tax policy nonprofit. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and global levels. For over 80 years, our goal has remained the same: to improve lives through tax policies that lead to greater economic growth and opportunity.

The resources compiled below are particularly useful for teaching and learning the basics of federal, state, and global tax policy.

Summary of the Latest Federal Income Tax Data, 2018 Update

Increasing Individual Income Tax Rates Would Impact a Majority of U.S. Businesses

Corporate Income Tax Rates in Europe

State and Local Sales Tax Rates, Midyear 2019

Sources of Tax Revenue: U.S. vs. OECD

Resisting the Allure of Gross Receipts Taxes: An Assessment of Their Costs and Consequences

The Impact of Trade and Tariffs on the United States

The Complicated Taxation of America’s Retirement Accounts

An Overview of Capital Gains Taxes

Announced, Proposed, and Implemented Digital Services Taxes in Europe

July 18, 2019

Throwback and Throwout Rules: A Primer

July 2, 2019

Base Erosion & Profit Shifting (BEPS)

June 14, 2019

Our new blog series reviews the evidence that has been gathered on the impact of policies targeted at profit shifting as the OECD and other multilateral forums explore options to resolve the current debate over policies that would adjust which countries can tax what share of income from multinational corporations.

The U.S. Tax Burden on Labor, 2019

May 23, 2019

The Earned Income Tax Credit (EITC): A Primer

May 21, 2019

Depreciation Requires Businesses to Pay Tax on Income That Doesn’t Exist

May 21, 2019

While tax rates matter to businesses, so too does the measure of income to which those tax rates apply. The corporate income tax is a tax on profits, normally defined as revenue minus costs. However, under the current tax code, businesses are unable to deduct the full cost of certain expenses—their capital investments—meaning the tax code is not neutral and actually increases the cost of investment.

Marginal Tax Rates for Pass-through Businesses Vary by State

May 14, 2019

Pass-through businesses are now the dominant business form in the U.S., making up more than half of the private sector workforce in every state. Federal taxes on income set a minimum tax rate for pass throughs, but marginal rates for pass throughs vary based on how states tax individual income.

Pass-Through Businesses Q&A

May 9, 2019

Pass-through businesses are the dominant business structure in America. Pass throughs file more tax returns and report more business income than C corporations. Pass-through businesses are not subject to the corporate income tax, but instead report their income on the individual income tax returns of owners. This blog will address some frequently asked questions about pass-through structure and taxation.

Taxable Income vs. Book Income: Why Some Corporations Pay No Income Tax

May 2, 2019

Why do some companies appear to be profitable but pay little or no federal income taxes? It’s largely due to differences between book and taxable income.

2017 GDP and Employment by Industry

April 30, 2019

In the U.S. economy, there are tens of millions of businesses, including more than 30 million pass-through businesses and more than a million C corporations. Most output and employment come from firms that provide services to consumers—such as education, health care, and social assistance services—though a large share of output and employment still comes from firms in production industries, particularly manufacturing.

Sources of Tax Revenue: U.S. vs. OECD

April 25, 2019

Firm Variation by Employment and Taxes

April 25, 2019

Less than one percent of businesses employ almost half of the private sector workforce. Large companies pay 89% of corporate income taxes in the United States.

Corporate and Pass-through Business Income and Returns Since 1980

April 23, 2019

More business income is reported on individual tax returns than corporate returns. The U.S. now has fewer corporations and more individually owned businesses. Corporations make up less than 5 percent of businesses but earn 60 percent of revenues.

Sources of Government Revenue in the OECD, 2019

April 23, 2019

OECD countries have on average become more reliant on consumption taxes and less reliant on individual income taxes. These policy changes matter, considering that consumption-based taxes raise revenue with less economic damage and distortionary effects than taxes on income.

Tax Treaty Network of European Countries

April 18, 2019

An Overview of Capital Gains Taxes

April 16, 2019

Tax Freedom Day 2019 is April 16th

April 10, 2019

Tax Freedom Day represents how long Americans as a whole have to work in order to pay the nation’s tax burden. In 2019, Americans will pay $3.4 trillion in federal taxes and $1.8 trillion in state and local taxes, for a total bill of over $5.2 trillion, or 29 percent of the nation’s income.

Policymakers Should Learn from Tax Complexity in Brazil and the United States

April 5, 2019

Capital Cost Recovery across the OECD, 2019

April 2, 2019

Capital cost recovery, though often overlooked, can have a significant impact on investment decisions—with far-reaching economic consequences.

Inventory Valuation in Europe

March 28, 2019

Average Income Tends to Rise with Age

March 21, 2019

Average income tends to rise dramatically as someone ages and gains education and experience. Viewing just one year of income tax data without digging any deeper misses some crucial context.

Increasing Individual Income Tax Rates Would Impact a Majority of U.S. Businesses

March 19, 2019

Since most U.S. businesses are pass-through businesses, such as partnerships, S corporations, LLCs, and sole proprietorships, changes to the individual income tax, especially to top marginal rates, can affect a business’s incentives to invest, hire, and produce.

How Do Transfers and Progressive Taxes Affect the Distribution of Income?

March 12, 2019

Federal tax rates vary by income group and tax source. The federal tax system redistributes income from high- and low-income taxpayers.

The Top 1 Percent’s Tax Rates Over Time

March 5, 2019

In the 1950s, when the top marginal income tax rate reached 92 percent, the top 1 percent of taxpayers paid an effective rate of only 16.9 percent. As top marginal rates have fallen, the tax burden on the rich has risen.

The Composition of Federal Revenue Has Changed Over Time

February 28, 2019

The federal income tax and federal payroll tax make up a growing share of federal revenue. Individual income taxes have become a central pillar of the federal revenue system, now comprising nearly half of all revenue.

Resisting the Allure of Gross Receipts Taxes: An Assessment of Their Costs and Consequences

February 6, 2019

Income Taxes on the Top 0.1 Percent Weren’t Much Higher in the 1950s

January 31, 2019

Recent plans to increase the tax burden on wealthy Americans, such as higher marginal income tax rates and wealth taxes, are flawed in several ways, including in their lack of understanding of tax history.

What the U.S. Can Learn from the Adoption (and Repeal) of Wealth Taxes in the OECD

January 30, 2019

The Real Lesson of 70 Percent Tax Rates on Entrepreneurial Income

January 29, 2019

Unclear if Warren’s Wealth Tax Proposal is Constitutional

January 25, 2019

There is a chance that Senator Warren’s proposed wealth tax would be found unconstitutional, but opinions are mixed and the precedents go both ways.

We Shouldn’t Scrap Dynamic Scoring

January 2, 2019

Unequal Tax Treatment Is Contributing to Rising Debt Levels for Entrepreneurs

December 13, 2018

A recent paper discusses two main trends related to U.S. entrepreneurs: the decrease in the number of entrepreneurs and the increase in their borrowing. Entrepreneurs have increased their debt holdings relative to their assets over the past three decades.

Corporate Tax Rates Around the World, 2018

November 27, 2018

Since 1980, the worldwide average statutory corporate tax rate has consistently decreased as countries have realized the negative impact that corporate taxes have on business investment decisions.

Family Provisions in the New Tax Code

October 31, 2018

2018 International Tax Competitiveness Index

October 23, 2018

The structure of a country’s tax code is an important determinant of its economic performance. Our 2018 international tax rankings provide a road map for each of the 35 OECD countries to improve the structure of their tax codes and achieve a more neutral, more competitive tax system.

2019 State Business Tax Climate Index

September 26, 2018

Our 2019 State Business Tax Climate Index compares each state on over 100 variables including corporate, individual, property, and sales taxes. How does your state rank?

Decomposing a Dynamic Revenue Estimate

July 30, 2018

New Analysis Shows How Input Tariffs Will Impact U.S. Manufacturing Sectors

July 16, 2018

The Right Way to Measure Tax Changes by Income Group

July 12, 2018

The Impact of Trade and Tariffs on the United States

June 27, 2018

Are Sugar-Sweetened Beverage Taxes Regressive? Evidence from Household Retail Purchases

June 19, 2018

Soda taxes are proposed with the promise to improve public health outcomes, but they come with equity concerns because of their regressive nature.

The Complicated Taxation of America’s Retirement Accounts

May 22, 2018

Changes to the way we tax long-term savings could remove the excess tax burden on saving and investment, helping individuals to better provide for their financial future.

New Federal Reserve Paper: State Corporate Taxes Hurt Entrepreneurship

January 16, 2018

Measuring Marginal Tax Rate on Capital Assets

December 12, 2017

This study demonstrates how Tax Foundation’s TAG model calculates the weighted average METRs for different capital assets in the corporate and noncorporate sectors. The high marginal rates of up to 53 percent in the corporate sector illustrate why there is an urgent need for business tax reform.

Taxes on the Rich Were Not That Much Higher in the 1950s

August 4, 2017

The top 1 percent of Americans today do not face an unusually low tax burden, by historical standards. In the 1950s, when the top marginal income tax rate reached 92 percent, the top 1 percent of taxpayers paid an effective rate of only 16.9 percent.

Testimony: The Tax Code as a Barrier to Entrepreneurship

February 15, 2017

Lawmakers interested in removing barriers to entrepreneurship should consider ways to mitigate 3 distortions in the U.S. tax code: the limited deductibility of business net operating losses, the limited deductibility of capital losses, and lengthy depreciation schedules.

Overview of the Tax Foundation’s Taxes and Growth Model

January 11, 2017

Three Differences Between Tax and Book Accounting that Legislators Need to Know

July 27, 2011

Depreciation Requires Businesses to Pay Tax on Income That Doesn’t Exist

May 21, 2019

While tax rates matter to businesses, so too does the measure of income to which those tax rates apply. The corporate income tax is a tax on profits, normally defined as revenue minus costs. However, under the current tax code, businesses are unable to deduct the full cost of certain expenses—their capital investments—meaning the tax code is not neutral and actually increases the cost of investment.

Pass-Through Businesses Q&A

May 9, 2019

Pass-through businesses are the dominant business structure in America. Pass throughs file more tax returns and report more business income than C corporations. Pass-through businesses are not subject to the corporate income tax, but instead report their income on the individual income tax returns of owners. This blog will address some frequently asked questions about pass-through structure and taxation.

Taxable Income vs. Book Income: Why Some Corporations Pay No Income Tax

May 2, 2019

Why do some companies appear to be profitable but pay little or no federal income taxes? It’s largely due to differences between book and taxable income.

Policymakers Should Learn from Tax Complexity in Brazil and the United States

April 5, 2019

Inventory Valuation in Europe

March 28, 2019

Three Differences Between Tax and Book Accounting that Legislators Need to Know

July 27, 2011

Throwback and Throwout Rules: A Primer

July 2, 2019

Depreciation Requires Businesses to Pay Tax on Income That Doesn’t Exist

May 21, 2019

While tax rates matter to businesses, so too does the measure of income to which those tax rates apply. The corporate income tax is a tax on profits, normally defined as revenue minus costs. However, under the current tax code, businesses are unable to deduct the full cost of certain expenses—their capital investments—meaning the tax code is not neutral and actually increases the cost of investment.

Marginal Tax Rates for Pass-through Businesses Vary by State

May 14, 2019

Pass-through businesses are now the dominant business form in the U.S., making up more than half of the private sector workforce in every state. Federal taxes on income set a minimum tax rate for pass throughs, but marginal rates for pass throughs vary based on how states tax individual income.

Pass-Through Businesses Q&A

May 9, 2019

Pass-through businesses are the dominant business structure in America. Pass throughs file more tax returns and report more business income than C corporations. Pass-through businesses are not subject to the corporate income tax, but instead report their income on the individual income tax returns of owners. This blog will address some frequently asked questions about pass-through structure and taxation.

2017 GDP and Employment by Industry

April 30, 2019

In the U.S. economy, there are tens of millions of businesses, including more than 30 million pass-through businesses and more than a million C corporations. Most output and employment come from firms that provide services to consumers—such as education, health care, and social assistance services—though a large share of output and employment still comes from firms in production industries, particularly manufacturing.

Firm Variation by Employment and Taxes

April 25, 2019

Less than one percent of businesses employ almost half of the private sector workforce. Large companies pay 89% of corporate income taxes in the United States.

Corporate and Pass-through Business Income and Returns Since 1980

April 23, 2019

More business income is reported on individual tax returns than corporate returns. The U.S. now has fewer corporations and more individually owned businesses. Corporations make up less than 5 percent of businesses but earn 60 percent of revenues.

Policymakers Should Learn from Tax Complexity in Brazil and the United States

April 5, 2019

Capital Cost Recovery across the OECD, 2019

April 2, 2019

Capital cost recovery, though often overlooked, can have a significant impact on investment decisions—with far-reaching economic consequences.

Increasing Individual Income Tax Rates Would Impact a Majority of U.S. Businesses

March 19, 2019

Since most U.S. businesses are pass-through businesses, such as partnerships, S corporations, LLCs, and sole proprietorships, changes to the individual income tax, especially to top marginal rates, can affect a business’s incentives to invest, hire, and produce.

Resisting the Allure of Gross Receipts Taxes: An Assessment of Their Costs and Consequences

February 6, 2019

The Real Lesson of 70 Percent Tax Rates on Entrepreneurial Income

January 29, 2019

Unequal Tax Treatment Is Contributing to Rising Debt Levels for Entrepreneurs

December 13, 2018

A recent paper discusses two main trends related to U.S. entrepreneurs: the decrease in the number of entrepreneurs and the increase in their borrowing. Entrepreneurs have increased their debt holdings relative to their assets over the past three decades.

Corporate Tax Rates Around the World, 2018

November 27, 2018

Since 1980, the worldwide average statutory corporate tax rate has consistently decreased as countries have realized the negative impact that corporate taxes have on business investment decisions.

2019 State Business Tax Climate Index

September 26, 2018

Our 2019 State Business Tax Climate Index compares each state on over 100 variables including corporate, individual, property, and sales taxes. How does your state rank?

New Federal Reserve Paper: State Corporate Taxes Hurt Entrepreneurship

January 16, 2018

Testimony: The Tax Code as a Barrier to Entrepreneurship

February 15, 2017

Lawmakers interested in removing barriers to entrepreneurship should consider ways to mitigate 3 distortions in the U.S. tax code: the limited deductibility of business net operating losses, the limited deductibility of capital losses, and lengthy depreciation schedules.

We Shouldn’t Scrap Dynamic Scoring

January 2, 2019

Decomposing a Dynamic Revenue Estimate

July 30, 2018

The Right Way to Measure Tax Changes by Income Group

July 12, 2018

Measuring Marginal Tax Rate on Capital Assets

December 12, 2017

This study demonstrates how Tax Foundation’s TAG model calculates the weighted average METRs for different capital assets in the corporate and noncorporate sectors. The high marginal rates of up to 53 percent in the corporate sector illustrate why there is an urgent need for business tax reform.

Overview of the Tax Foundation’s Taxes and Growth Model

January 11, 2017

An Overview of Capital Gains Taxes

April 16, 2019

The Complicated Taxation of America’s Retirement Accounts

May 22, 2018

Changes to the way we tax long-term savings could remove the excess tax burden on saving and investment, helping individuals to better provide for their financial future.

Announced, Proposed, and Implemented Digital Services Taxes in Europe

July 18, 2019

Base Erosion & Profit Shifting (BEPS)

June 14, 2019

Our new blog series reviews the evidence that has been gathered on the impact of policies targeted at profit shifting as the OECD and other multilateral forums explore options to resolve the current debate over policies that would adjust which countries can tax what share of income from multinational corporations.

Tax Treaty Network of European Countries

April 18, 2019

2018 International Tax Competitiveness Index

October 23, 2018

The structure of a country’s tax code is an important determinant of its economic performance. Our 2018 international tax rankings provide a road map for each of the 35 OECD countries to improve the structure of their tax codes and achieve a more neutral, more competitive tax system.

New Analysis Shows How Input Tariffs Will Impact U.S. Manufacturing Sectors

July 16, 2018

The Impact of Trade and Tariffs on the United States

June 27, 2018

The U.S. Tax Burden on Labor, 2019

May 23, 2019

Sources of Tax Revenue: U.S. vs. OECD

April 25, 2019

Sources of Government Revenue in the OECD, 2019

April 23, 2019

OECD countries have on average become more reliant on consumption taxes and less reliant on individual income taxes. These policy changes matter, considering that consumption-based taxes raise revenue with less economic damage and distortionary effects than taxes on income.

Tax Freedom Day 2019 is April 16th

April 10, 2019

Tax Freedom Day represents how long Americans as a whole have to work in order to pay the nation’s tax burden. In 2019, Americans will pay $3.4 trillion in federal taxes and $1.8 trillion in state and local taxes, for a total bill of over $5.2 trillion, or 29 percent of the nation’s income.

The Composition of Federal Revenue Has Changed Over Time

February 28, 2019

The federal income tax and federal payroll tax make up a growing share of federal revenue. Individual income taxes have become a central pillar of the federal revenue system, now comprising nearly half of all revenue.

The Earned Income Tax Credit (EITC): A Primer

May 21, 2019

Average Income Tends to Rise with Age

March 21, 2019

Average income tends to rise dramatically as someone ages and gains education and experience. Viewing just one year of income tax data without digging any deeper misses some crucial context.

How Do Transfers and Progressive Taxes Affect the Distribution of Income?

March 12, 2019

Federal tax rates vary by income group and tax source. The federal tax system redistributes income from high- and low-income taxpayers.

The Top 1 Percent’s Tax Rates Over Time

March 5, 2019

In the 1950s, when the top marginal income tax rate reached 92 percent, the top 1 percent of taxpayers paid an effective rate of only 16.9 percent. As top marginal rates have fallen, the tax burden on the rich has risen.

Income Taxes on the Top 0.1 Percent Weren’t Much Higher in the 1950s

January 31, 2019

Recent plans to increase the tax burden on wealthy Americans, such as higher marginal income tax rates and wealth taxes, are flawed in several ways, including in their lack of understanding of tax history.

What the U.S. Can Learn from the Adoption (and Repeal) of Wealth Taxes in the OECD

January 30, 2019

The Real Lesson of 70 Percent Tax Rates on Entrepreneurial Income

January 29, 2019

Unclear if Warren’s Wealth Tax Proposal is Constitutional

January 25, 2019

There is a chance that Senator Warren’s proposed wealth tax would be found unconstitutional, but opinions are mixed and the precedents go both ways.

Family Provisions in the New Tax Code

October 31, 2018

Are Sugar-Sweetened Beverage Taxes Regressive? Evidence from Household Retail Purchases

June 19, 2018

Soda taxes are proposed with the promise to improve public health outcomes, but they come with equity concerns because of their regressive nature.

Taxes on the Rich Were Not That Much Higher in the 1950s

August 4, 2017

The top 1 percent of Americans today do not face an unusually low tax burden, by historical standards. In the 1950s, when the top marginal income tax rate reached 92 percent, the top 1 percent of taxpayers paid an effective rate of only 16.9 percent.