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.
![Comparing 2020 income tax proposals by Joe Biden, Pete Buttigieg, Bernie Sanders, and Elizabeth Warren. Trump payroll tax proposal](https://taxfoundation.org/wp-content/uploads/2018/10/money-300x200.jpg)
![This week, the Massachusetts Senate is expected to vote on a bill which would ban all non-tobacco flavors from tobacco products. The bill also imposes an excise tax of 75 percent of wholesale value.](https://taxfoundation.org/wp-content/uploads/2019/11/Massachusetts_Statehouse-e1574094110357-300x189.jpg)
![Italy income tax system Italy local income tax system marginal tax rates Economic impact of a digital services tax in Italy. Learn more about Italy web tax.](https://taxfoundation.org/wp-content/uploads/2019/11/Italy-Florence-e1574090250779-300x201.jpeg)
![Elizabeth Warren’s Plans Could Lead to Effective Tax Rates Over 100 Percent on Capital Income For Some](https://taxfoundation.org/wp-content/uploads/2019/11/linkedin-In-Stream_Wide___warren2-300x158.jpg)
Illustrating Senator Warren’s Taxes on Capital Income
Taken together, these proposed tax changes would significantly raise marginal and effective tax rates and increase the cost of capital, all of which would lead to a reduced level of output and less revenue than anticipated.
5 min read![How do taxes in Lithuania compare internationally?](https://taxfoundation.org/wp-content/uploads/2019/11/Lithuania-flag-300x225.jpg)
![If states wish to tax video streaming services, they should do it by including them in their sales tax base rather than with new excise taxes.](https://taxfoundation.org/wp-content/uploads/2019/11/streaming-services-e1573681608772-300x200.jpg)
![Considering the economic impact of a wealth tax on innovation.](https://taxfoundation.org/wp-content/uploads/2019/11/invent-innovation-e1573589198808-300x200.jpg)
Proponents of Wealth Taxation Must Consider its Impact on Innovation
Instead of raising revenue from a narrow tax base through high tax rates, policymakers should identify options to raise revenue efficiently through broad-based taxes consistent with sound tax policy.
4 min read![Bipartisan Emergency Coronavirus Relief Act of 2020, Millionaire's surtax, millionaires surtax, Van Hollen, Don Beyer](https://taxfoundation.org/wp-content/uploads/2019/06/capitol-us-capitol-building-federal-tax-policy-hill-event-e1568319729135-300x200.jpeg)
![Inflation Reduction Act corporate taxes most economically damaging way to raise revenue Raise the corporate tax rate, raise corporate tax rate, corporate tax hike, corporate tax increase, corporate tax burden](https://taxfoundation.org/wp-content/uploads/2019/11/manufacturing-factory-worker-labor-full-expensing-jobs-corporate-investment-economy-e1573485360412-300x200.jpeg)
![OECD Pillar 1 Amount A proposal OECD Secretariat, OECD unified approach pillar 1, OECD pillar 1, OECD international tax, OECD unified approach digital tax, OECD multinational businesses, OECD digital tax](https://taxfoundation.org/wp-content/uploads/2019/10/flag-oecd-international-3-e1571950955538-300x200.jpeg)
The OECD’s Pillar 2 Proposal Raises Serious Questions
Addressing tax avoidance is a key political issue for many countries, but these policies should not be discussed without accounting for the size of the current problem, how recent policy changes have addressed it, and what potential impacts might come from this new approach.
4 min read