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.

 

Moore tax case of Moore vs United States consumption tax base
Blog

Why Moore v. U.S. Won’t Get Us a Consumption Tax Base

At first glance, a ruling for the plaintiffs in Moore might seem to solve some of the timing problems with the U.S. tax system. Unfortunately, upon greater inspection, such a ruling might create new timing problems. And the more rigid the ruling, the harder it would be to fix the timing problems it would create.

5 min read
2023 Tax Extenders Expiring TCJA Business Tax Provisions and Child Tax Credit Year-End Tax Deal
Blog

Tax Extenders in 2023: Three Major Business Provisions and an Expanded Child Credit?

In Congress, both parties have expressed widespread support for improving the treatment of R&D and potentially extending some or all of the major business provisions, while the White House and congressional Democrats have indicated interest in an expanded child tax credit, suggesting potential for a deal.

6 min read
Tax competition and the global minimum tax: the latest on the global tax agreement at the OECD
Blog
Europe

What’s Next for Tax Competition?

The rules of tax competition are changing with the recent agreement on a global minimum tax and other changes to tax rules around the world, but that does not mean the contest is over.

5 min read
Blog
Europe

Assessing the EU Tax Observatory’s View on Profit Shifting and the Global Minimum Tax

The EU Tax Observatory has taken an extreme view in assessing the global minimum tax. The rules were not meant to immediately reduce the stock of shifted profits or align profitability levels more closely with employment costs. The rules do change incentives for multinationals, but profits may continue to remain in low-tax jurisdictions for many years.

6 min read
Future of EU tax policy full expensing cost recovery corporate taxation
Blog
Europe

Is EU VAT Compliance Actually Improving?

While the European Commission focuses on improving VAT compliance, policy is a major contributor to VAT revenue losses. The VAT actionable policy gap is 15.65 percent, more than triple the compliance gap.

5 min read