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.

Design Matters When Raising Taxes to Reduce the Deficit and Stabilize the Debt-to-GDP ratio US debt taxes deficits Gross Domestic Product GDP
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What Is GDP and Why Should I Care About It?

GDP stands for gross domestic product and is calculated by measuring a country’s total consumption, government spending, investments, and net exports.

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Another Digital Services Tax in Sight

Canada is planning to join the club of countries that, in the past 3 years, introduced a digital services tax (DST) despite U.S. opposition and concerns expressed by Canadian businesses.

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As the TCJA expiration nears, lawmakers face difficult choices in reforming the CTC. While revenue, distributional and economic effects are important, lawmakers should also focus on simplifying the rules and reducing the administrative challenges.

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Should Massachusetts Tax Netflix?

A bill introduced in the Massachusetts House, (H. 74) would expand funding for community media programming by imposing a new tax on the gross revenues of digital streaming service providers. The sentiment is understandable, but the proposed solution leaves much to be desired.

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Taxes and Illicit Trade

Taxation plays a key role in driving illicit trade. People respond to incentives, and sizable price markups for legal cigarettes create incentives for tax avoidance.

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Introducing TaxFoundation.org 2.0

Our newly enhanced website will improve accessibility to the very data, research, and experts that make us the world’s leading independent tax policy organization.

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