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.

Neutral Cost Recovery for Structures Reform TCJA
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Why Neutral Cost Recovery Matters

Allowing full deductibility of residential structures would mean more housing construction, particularly multifamily housing—a practical solution to address housing affordability challenges.

6 min read
Kamala Harris unrealized capital gains tax proposal billionaire minimum tax
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Analysis of Harris’s Billionaire Minimum Tax on Unrealized Capital Gains

In her campaign for president, VP Kamala Harris has embraced all the tax increases President Biden proposed in the White House FY 2025 budget—including a new idea that would require taxpayers with net wealth above $100 million to pay a minimum tax on their unrealized capital gains from assets such as stocks, bonds, or privately held companies.

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North Dakota property tax ballot measure 2024
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North Dakota Considers Eliminating Property Taxes

Eliminating the property tax will unfortunately set North Dakota back in significant ways, making the state a national outlier and eroding regional competitiveness.

6 min read
World War II or WWII US taxation
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Short Form

How World War II Reshaped US Taxation

World War II shaped many aspects of the modern world, including the US tax code. But the dramatic changes to our system that military mobilization required didn’t subside when the fighting finished; they’ve persisted to today.

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Meals Tax Rates across the Nation US food taxes on prepared food and restaurant tax information
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Meals Taxes across the Nation

States would do better to broaden the sales tax base to include currently exempt classes of final consumption than to impose disproportionate taxes on prepared foods.

6 min read
10 Less Harmful Ways of Raising Federal Revenues
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10 Less Harmful Ways of Raising Federal Revenues

If lawmakers are convinced that new revenues must be part of any long-term effort to solve the budget crisis or offset the cost of extending the TCJA, they must choose the least harmful ways of raising new revenues or else risk undermining their efforts by slowing economic growth.

7 min read
How do import tariffs affect exports
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How Do Import Tariffs Affect Exports?

When the government imposes a tariff, it may be trading jobs and production in one part of the economy for jobs in another part of the economy by increasing production costs for downstream industries.

6 min read