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.

 

2026 State of the Union Trump Tariffs Tax Cuts Debt
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2026 State of the Union: Five Things to Know

President Trump is scheduled to deliver the annual State of the Union address to Congress. The speech is bound to address a multitude of topics, but taxes and (especially) tariffs will certainly feature prominently.

6 min read
Trump’s Reciprocal Tariff Calculations Trump Tariffs Supreme Court Decision on Liberation Day Tariffs
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Supreme Court Strikes Down President Trump’s Tariffs

The Supreme Court ruling against the IEEPA tariffs provides immediate relief to US businesses and workers and is a welcome rebuke of President Trump’s overreach of executive authority to unilaterally impose significant tax hikes on the US economy.

6 min read
Poland digital services tax, DST
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Europe

Poland Considering a Second Harmful Digital Tax

Poland is proposing to broaden and raise its digital services tax (DST) from 1.5 percent to 3 percent. Because DSTs tax revenues, not profits, a company with a 10 percent profit margin would face a 30 percent effective tax rate on digital services provided in Poland.

6 min read
No Tax on Social Security vs. Proposed $4,000 Senior Bonus Senior Tax Deduction One Big Beautiful Bill Act OBBB
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How Does the Additional Senior Deduction Compare to No Tax on Social Security?

The increased senior deduction with the phaseout would deliver a larger tax cut to lower-middle- and middle-income taxpayers compared to exempting all Social Security benefits from income taxation and would not weaken the trust funds as much. But given the temporary nature of the policy, it would increase the deficit-impact of the reconciliation bills without boosting long-run economic growth.

3 min read
2023 corporate tax rates and brackets including corporate income tax data
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Here’s Why Corporate Taxes May Appear Lower After the OBBBA

Near-term corporate tax payments may fall, and financial statement data may appear unusual, but over time, revenues will stabilize, book-tax gaps will fade, and the US tax code will incentivize domestic investment.

8 min read
Global Tax policy Ideas, 2026
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Three Global Tax Policy Ideas in Need of a Reality Check

Formulary apportionment, global tax harmonization, and broad tax increases on services all face design, implementation, and economic barriers. When designing tax systems, policymakers should focus on doing the basic things well and avoid harmful policies that could stunt growth.

7 min read