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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.

Both inbound and outbound foreign direct investment (FDI) are critical to sustaining supply chain resiliency and reducing economic risks

How FDI Adds Value to Supply Chains

Although the dispersion of our supply chains throughout the world has been scrutinized in recent years, both inbound and outbound foreign direct investment are critical to sustaining supply chain resiliency and reducing economic risks for both firms and investors.

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Biden corporate minimum tax global tax deal international tax corporate tax corporate global minimum tax proposal

4 Things to Know About the Global Tax Debate

The Biden administration has been supportive of the negotiations, but the changes should be reviewed in the context of recent policy changes in the U.S. and elsewhere, the general landscape of business taxation in the U.S., and potential challenges and risks arising from the global tax deal.

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US multinationals are large employers and investors in the US See FDI us employment impact

Why FDI Matters for U.S. Employment, Wages, and Productivity

Contrary to the Biden administration’s claims, raising taxes on cross-border investment would hurt U.S. economic growth and jobs. Research shows that FDI creates jobs in the U.S. and raises workers’ wages and productivity.

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The Legacy of Harvard Economist Dale Jorgenson

Dr. Jorgenson’s work has been instrumental in convincing many in the tax policy community to take seriously the need to factor in the economic effects of taxation on capital formation, productivity, wages, and employment in forecasting the welfare and federal budget consequences of changes in tax policy.

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