Evaluating U.S. Tax Reform Options & Trade-Offs

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.

 

The One Big Beautiful Bill Act Creates Unequal Tax Treatment for Gambling Losses
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The One Big Beautiful Bill Act Creates Unequal Tax Treatment for Gambling Losses

In a surprising tax code alteration that has frustrated Americans who enjoy gambling, a provision in the One Big Beautiful Bill Act limits gambling losses that can be used to offset gambling winnings to 90 percent of their value. This provision introduces a steep tax penalty for professional gamblers and certain casual bettors.

5 min read
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The Latest on the Global Tax Agreement

The agreement represents a major change for tax competition as well, and many countries will rethink their tax policies for multinationals. However, the US will continue to chart its own course, and other countries may prefer to do the same, depending on the final outcome of the G7 statement.

8 min read
Trump Pharma Tariffs Would Raise Drug Prices for Americans FDA US pharmaceutical generic drugs and brand drugs higher drug prices and drug shortages EU India China national security
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Trump Pharma Tariffs Would Raise Drug Prices for Americans

President Trump has recently floated the idea of imposing tariffs of up to 250 percent on pharmaceuticals, with the intention of shifting pharmaceutical production to the US. These tariffs would not only drive drug prices higher but could also lead to shortages and reduce long-run drug innovation.

3 min read
One Big Beautiful Bill Act international tax changes including to GILTI, FDII, and BEAT. See more about QBAI, FDDEI and NCTI
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Reviewing the International Tax Provisions in the One Big Beautiful Bill Act

The OBBBA moved the US international tax system in the right direction on several fronts. However, some of the changes, while encouraging certain domestic activity and exports, may harm physical activity abroad that supports US competitiveness and domestic activity.

8 min read
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The Future of BEAT

Even when international relations are frayed, there is value in finding ways to combat corporate profit shifting while also fostering a healthy commercial atmosphere and positive trade relations.

7 min read
OBBBA business expensing state tax codes 2025 One Big Beautiful Bill Business Expensing State Tax Conformity Questions
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The OBBBA Gets Expensing Right. States Should Follow Suit.

However states choose to respond to other tax provisions of the One Big Beautiful Bill Act, they should conform to the pro-growth provisions, which represent a marked improvement in the corporate tax code.

12 min read