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.

College sports tax exemption and tax-free college sports discussions
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The Big Business of Tax-Free College Sports

Moving from one athletic conference to another can mean millions in additional revenue sharing from lucrative broadcasting contracts and other revenue streams, all tax-free.

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UN tax cooperation efforts Tax Foundation response on cross border trade and investment United Nations general assembly
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Global Tax Tug of War: Comparing the UN and OECD Approaches

The United Nations (UN) is preparing to flex its muscles on international tax policy. Several developing countries say the OECD’s approach favors richer countries at their expense, and the UN hopes to fix this.

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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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Short Form

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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Canada digital services tax Canada digital tax proposal health care premiums and Canada marginal tax rates and Canada upward mobility
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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.

4 min read
Child Tax Credit Reform Debate Continues Tax Cuts and Jobs Act TCJA Expiration and tax policy trade-offs Family Security Act Mitt Romney and Brookings Hamilton Project
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Lawmakers Envision Different Paths for the Child Tax Credit

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.

6 min read
Taxes and illicit trade China cigarette smuggling us tax revenue impact
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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.

4 min read