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.
![Charitable Deduction or Charitable Tax Deduction, impact on charitable gifts and charitable giving](https://taxfoundation.org/wp-content/uploads/2022/12/AdobeStock_301599172-e1671568014737-300x200.jpeg)
Would Americans Make Charitable Donations without Tax Incentives?
Over the long run, tax policies that grow after-tax incomes and the economy do more to boost charitable giving than policies that try to incentivize people to be charitable.
9 min read![2023 State Business Tax Climate Index Wins Above Replacement how to think about tax competition](https://taxfoundation.org/wp-content/uploads/2022/10/Sources-of-data-chart-table-calculator-Nuthawut-e1667483597132-300x200.jpeg)
Changing Trends in R&D Investment Show the Importance of Business R&D
Lawmakers should recognize both the growing importance of business R&D and the need to support it through a commonsense tax policy, namely a return to full and immediate expensing for R&D.
6 min read![Chile tax reform Chile income tax system, Taxes in chile](https://taxfoundation.org/wp-content/uploads/2020/08/linkedin-In-Stream_Wide___chile-4141951-300x158.jpg)
Chile’s Tax Reform Heads in the Wrong Direction
As Chile looks to the future, the accelerated deductions for capital investment costs should be extended and made permanent while unnecessary tax hikes on individuals and capital should be avoided. Policymakers should focus on growth-oriented tax policy that encourages investment, savings, and entrepreneurial activity, increasing Chile’s international tax competitiveness.
4 min read![House tax plan impact and Economy Loses More than Revenue Gains in Ways and Means “Build Back Better” Act](https://taxfoundation.org/wp-content/uploads/2021/09/corporate-business-factory-manufacturing-worker-2-300x169.jpeg)
Return to R&D Expensing Crucial for Manufacturing and Technology Investment
The tax treatment of research and development (R&D) expenses is one of the biggest issues facing Congress as the year winds down.
4 min read![EU tobacco tax directive EU cigarette tax rates 2021 VAT EU reforms](https://taxfoundation.org/wp-content/uploads/2021/09/Europe-global-map-3-300x183.jpg)
The Future of Tobacco Taxation in Europe
Later this week, the European Union is expected to release a new Tobacco Tax Directive, the first update in more than a decade. Early reports indicate that the EU will propose a significant increase to the existing minimum cigarette tax rates levied across the Union and expand the product categories that are taxed, including a block-wide vaping tax.
7 min read![US tax US competitiveness taxes TCJA expiring tax policies Tax Cuts and Jobs Act Inflation Reduction Act](https://taxfoundation.org/wp-content/uploads/2022/10/US-competitiveness-taxes-expiring-tax-policies-Tax-Cuts-and-Jobs-Act-and-Inflation-Reduction-Act-e1670267167452-300x200.jpeg)
Tighter Limits on U.S. Interest Deductibility Make U.S. an Outlier and Increase Pain of Rising Interest Rates
While there is disagreement about the amount of interest that should be deductible, it’s clear that the limit based on EBIT makes the U.S. an outlier compared to other countries across the OECD while raising the cost of new investment.
7 min read![UK tax plan Rishi Sunak tax plan](https://taxfoundation.org/wp-content/uploads/2021/02/uk-london-46-300x200.jpg)
A Tale of Two Tax Plans in the United Kingdom
History is clear. Lowering budget deficits via spending restraint frees resources for additional private output and jobs. Lowering them by raising taxes on business investment and labor services makes it harder to dis-inflate without a recession.
7 min read![Macron Biden visit to discuss EU subsidies in Inflation Reduction Act energy subsidies](https://taxfoundation.org/wp-content/uploads/2022/11/Macron-Biden-visit-to-discuss-EU-subsidies-in-Inflation-Reduction-Act-energy-subsidies-e1669830281516-300x200.jpg)
How the Inflation Reduction Act and Pillar Two Could Shape the Future of EU Competitiveness
French President Macron is coming to Washington, D.C., this week to ask President Biden the question on the minds of European leaders: “Why did you do this to us?”
6 min read![state full expensing permanent to curb inflation Cost Recovery and Full Expensing](https://taxfoundation.org/wp-content/uploads/2020/06/linkedin-In-Stream_Wide___business_equipment_factory_expensing_worker_50-e1591976460810-300x158.jpeg)
States Should Make Full Expensing Permanent to Help Curb Inflation
In times of high inflation, states should consider adopting permanent full expensing because it boosts long-run productivity, economic output, and wages.
7 min read![EU fiscal fairness economic fairness and tax fairness Testimony before the EU Parliament’s Subcommittee on Tax Matters Public hearing on “The impact of national tax reforms on the EU economy”](https://taxfoundation.org/wp-content/uploads/2021/10/Testimony-before-the-EU-Parliament-Subcommittee-on-Tax-Matters-hearing-on-the-impact-of-national-tax-reforms-on-the-EU-economy-Tax-Foundation-e1633723852731-300x200.jpeg)
EU “Fiscal Fairness”
Europe is facing difficult times. Governments are balancing the need for more resources with the need to maintain peace and prosperity domestically. To properly strike this balance, EU policymakers must incorporate “Fiscal Fairness” into the debate.
2 min read