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.

 

Washington DC council decoupling tax code OBBBA
Blog

DC Should Be Judicious About Decoupling from the OBBBA

While the Council of DC is right to consider decoupling its tax code from several revenue-reducing provisions in the OBBBA, they should maintain conformity with the business expensing reforms that are strongly pro-growth, better align with sound tax principles, and primarily change the timing of revenues.

4 min read
digitalization of the economy, international tax treaty system, OECD digital economy
Blog

Sound Tax Policy Can Withstand Creative Destruction

Creative destruction—coined by famed economist Joseph Schumpeter—is the idea that new innovations disrupt and “destroy” existing economic structures as they create better and more efficient products and processes.

4 min read
US federal fiscal system is progressive and redistributive tax and spending
Blog

Federal Tax System Remains Highly Progressive After the OBBBA

The 2017 Tax Cuts and Jobs Act (TCJA) simultaneously increased tax progressivity and decreased redistribution in the tax code. Our estimates suggest the OBBBA similarly combines a more progressive tax system with a lower degree of tax redistribution.

4 min read
Dr. Sergio Vasques
Blog
Europe

Fiscal Forum: Future of the EU Tax Mix with Sérgio Vasques

Sean Bray interviewed Dr. Sérgio Vasques, Professor of Tax Law at the Catholic University of Lisbon and former Portuguese Secretary of State for Tax Affairs, about the future of the EU tax mix.

7 min read