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.

Wyden 199a pass-through deduction proposal Democrats proposed to expand child tax credit as part of covid relief package. Analysis of the “SALT Act” state and local tax deduction cap, Restoring Tax Fairness to States and Localities Act, SALT cap repeal, eliminate SALT cap
Blog

Growth Should Be a Key Consideration if Corporate SALT Is Limited

Lawmakers should prioritize pro-growth tax policies and use the least economically damaging offsets to make the legislation fiscally responsible. If lawmakers choose to use C-SALT, they should carefully consider the economic trade-off with permanent, pro-growth tax cuts that support investment and innovation in the US.

7 min read
Inflation Reduction Act IRA repeal and reforms
Blog

Four Paths for Inflation Reduction Act Reforms

The Inflation Reduction Act (IRA) introduced a series of new targeted tax breaks, many of which seem to be much more expensive than originally forecasted. Understandably, repealing these subsidies is a key option for policymakers looking to pay to extend the expiring broader tax cuts passed in the Tax Cuts and Jobs Act (TCJA).

7 min read
Kansas property tax levy limit reform options 2025
Blog

Kansas Policymakers Consider Variations of a Property Tax Levy Limit

As the property tax debate continues in Kansas, two new proposals have emerged that are much better structured, and would be more effective, than the assessment limits. However, policymakers should consider additional modifications.

7 min read
Trump tariffs threaten American Whiskey and Bourbon exports US tariffs and retaliation US tariffs tax on exports and US exporters
Blog

Learning from the First Trade War: Retaliation Hurts US Exporters

As we learned in the first trade war, retaliation will exact harm on US exporters by lowering their export sales—and the US-imposed tariffs will directly harm exporters too. US-imposed tariffs can burden exporters by increasing input costs, which acts like a tax on exports.

4 min read
2025 Tax Reform TCJA Offsets Budget Offsets
Blog

Picking the Right Budgetary Offsets Key to Tax Reform Success

In a perilous economic and fiscal environment, with instability created by Trump’s trade war and publicly held debt on track to surpass the highest levels ever recorded within five years, a lot rides on how Republicans navigate tax and spending reforms in reconciliation.

6 min read