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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.

Lawmakers debate permanent bonus depreciation reform options including permanent full expensing and other cost recovery improvements manufacturing economy us workers

Expensing: It Pays to Be Permanent

As lawmakers work through the reconciliation process, permanently enacting improvements to deductions for capital investment and research and development (R&D) costs will create an economically powerful package.

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Trump Global Minimum Tax Order

Five Things to Know About Trump’s Global Minimum Tax Order

This week, the incoming Trump administration issued a day-one executive order on the global minimum tax agreement known as Pillar Two, which seeks to ensure multinational corporations pay at least 15 percent in income tax.

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state flat tax trend and state flat income taxes 2024

The State Flat Tax Revolution: Where Things Stand Today

From 2021-2024, within the span of 3.5 years, more states enacted laws converting graduated-rate individual income tax structures into single-rate income tax structures than did so in the whole 108-year history of state income taxation up until that point.

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