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.

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What the OECD’s Pillar Two Impact Assessment Misses

The process leading to the global minimum tax has been messy, and the mess will likely continue for years to come. New revenues are hardly a salve for the setback they represent.

7 min read
Analysis of West Virginia tax reform options including West Virginia income tax relief and property tax reform
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West Virginia Is Being Left Behind on Tax Relief

West Virginia is one of only seven states that hasn’t offered any significant tax relief since 2021—and five of the other six forgo an individual income tax.

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Iowa tax reform including Iowa property tax reform Governor Kim Reynolds
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Iowa Proposal to Rein in Property Taxes Misses the Mark

On the heels of adopting one of the most comprehensive state tax reform packages in years, Iowa lawmakers are back in Des Moines with property tax relief in their sights. But while the issue is worthy of their attention, House File 1 (HF 1) as currently drafted misses the mark.

4 min read
Adobe Stock, Robert Hainer
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Georgia Should Reinforce Its Tax Reform Intentions

By shifting to a flat income tax, Georgia has already made an important commitment to tax competitiveness. Although the state’s top rate threshold is already very low, a true single-rate income tax will help protect taxpayers from inflation-related tax increases and provide a buffer against rising tax rates in the future. To combine responsible rate reductions with these benefits, Georgia should create tax triggers that empower the state to keep pace with its competition.

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Tax filing Tax Season Stone's Throwe Photo
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Frustration and Delays as the 2023 Tax Filing Season Begins

A combination of long-standing IRS operational deficiencies, the agency’s temporary closure due to the pandemic, and the now-expired pandemic relief produced a perfect recipe for a paper backlog.

4 min read
state wealth tax proposals state flat tax state income tax reform state tobacco taxes, state cigarette tax rates and cigarette taxes state tax incentives 2021 state revenue and 2021 state budget projections state tax reform covid and state tax cuts covid
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Wealth Tax Proposals Are Back as States Take Aim at Investment

In a coordinated effort, lawmakers in seven states that collectively house about 60 percent of the nation’s wealth—California, Connecticut, Hawaii, Illinois, Maryland, New York, and Washington—are introducing wealth tax legislation on Thursday.

7 min read
Why dynamic scoring still matters dynamic tax modeling and difference between static and dynamic scoring
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Three Reasons Why Dynamic Scoring Still Matters

Lawmakers should use the most comprehensive analytical tools available to them—like dynamic scoring—to make informed decisions about policy changes.

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Transatlantic Trade and Investment Partnership (T-TIP) US EU tax and trade policy why Congress should care about EU tax policy
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Europe

In the Shadow of T-TIP: Why Congress Should Care About EU Tax and Trade Issues in 2023

The EU’s unilateral approach with carbon taxes, faster track on the global minimum tax, and threat of renewed efforts on DSTs means that U.S. policymakers face some hard choices. Policymakers on both sides of the Atlantic should keep in mind pro-growth tax and trade principles that promote a rules-based international order and increase opportunity.

7 min read
Taxes in Everything Die Hard Christmas Movie Edition Bearer Bonds
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Taxes in Everything: Die Hard Edition

It’s Christmas time, and for millions of families around the country, that means revisiting some classic holiday movies. For some, that includes It’s a Wonderful Life and Home Alone. For others, that includes Die Hard.

3 min read