The economic crisis caused by the coronavirus pandemic poses a triple challenge for tax policy in the United States. Lawmakers are tasked with crafting a policy response that will accelerate the economic recovery, reduce the mounting deficit, and protect the most vulnerable.
To assist lawmakers in navigating the challenge, and to help the American public understand the tax changes being proposed, the Tax Foundation’s Center for Federal Tax Policy modeled how 70 potential changes to the tax code would affect the U.S. economy, distribution of the tax burden, and federal revenue.
In tax policy there is an ever-present trade-off among how much revenue a tax will raise, who bears the burden of a tax, and what impact a tax will have on economic growth. Armed with the information in our new book, Options for Reforming America’s Tax Code 2.0, policymakers can debate the relative merits and trade-offs of each option to improve the tax code in a post-pandemic world.
In recent years, European countries have undertaken a series of tax reforms designed to maintain tax revenue levels while protecting households and businesses from high inflation.
As increased political attention focuses on the state of the American worker, expect to see a resurgence of the argument that the labor share of income is in decline.
The assessment of the tariffs former president Donald Trump imposed in 2018 and 2019 is clear: the policies have had a negative effect on American’s welfare.
On 12 September, the European Commission released a proposal called “Business in Europe: Framework for Income Taxation” (BEFIT) and two associated proposals on transfer pricing and a Head of Office tax system.
Given enough time, everything old is new again—including tax ideas best consigned to history. But worldwide combined reporting, which a few states flirted with in the 1980s, is rearing its head again.
As Congress continues its work on the fiscal year 2024 appropriations process and associated tax provisions, it should consider an often-overlooked tax provision: the limitation on deductions companies take for interest payments.
The Spanish election results are moving the country away from pro-growth tax reforms while launching the government’s tax agenda, and the agenda of the Spanish presidency of the Council of the European Union, into uncertainty.
Policymakers at all levels of government should avoid the pitfalls of incentives. Instead, they should focus on creating a more efficient, neutral, and structurally sound tax code to the benefit of all types of business investment.
Congress should recognize that Pillar Two has significant U.S.-specific downsides, but also that it cannot unilaterally stop Pillar Two from taking effect. Instead, it should carefully consider a policy response for the next Congress, when a variety of forces are likely to compel it to act.
Politicians often bemoan the trade deficit, but their disdain for this economic statistic is largely misplaced. The trade deficit reflects deeper choices about how we use our money, and reducing it may require lowering our standard of living.