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.
Maine’s proposal to increase tobacco and vapor taxes has at least four major issues: flawed revenue allocation, risk of increased smuggling, regressivity, and violation of the harm reduction principle.4 min read
The current prospect for the global minimum tax requires the attention of U.S. lawmakers. Otherwise, a tax benefit at home will just mean a tax increase abroad.6 min read
States Should Act Fast on UC Trust Fund Deposits, and Other Takeaways from the New Treasury Guidance on ARPA Funding
States will continue to cut taxes because revenues are skyrocketing. But some will also be keeping a close eye on litigation targeting this dubious restriction on states’ fiscal autonomy.8 min read
While Tennessee now boasts no individual income tax, there is still more work to be done for businesses—Tennessee is in a good position to get the job done.7 min read
Before declaring victory, it is imperative to get the details right. The latest proposal is a drastic improvement over the last one, but there is still more work to be done if the Magnolia State is to sustain the intended transformation.7 min read
Consumer prices rose by 7 percent in 2021, the highest annual rate of inflation since 1982. Where did this inflation come from and what might its impacts be? Tax and fiscal policy offer important clues.5 min read
Recent discussions of a proposed wealth tax for the United States have included little information about trends in wealth taxation among other developed nations. However, those trends and the current state of wealth taxes in OECD countries can provide context for U.S. proposals.3 min read
The National Taxpayer Advocate argued the IRS telephone service “was the worst it has ever been” in 2021, with an answer rate of about 11 percent.4 min read
Lawmakers in Washington need not revisit their vapor tax. The current tax is levied at an appropriate level and it has the right tax base.3 min read
A proposal to introduce a wholesale tax on vapor products in Alaska could make switching from combustible tobacco products very expensive for smokers.4 min read