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.
California Considers Doubling its Taxes
Practically doubling state taxes—even if the burden is partially offset through state-provided health coverage—could send taxpayers racing for the exits.
6 min readU.S. Fiscal Response to COVID-19 Among Largest of Industrialized Countries
As the U.S. grapples with rising price inflation, a large and growing national debt, as well as a possible economic slowdown due to Omicron, the decision to provide additional fiscal support will prove to be a difficult one. Policymakers can debate how much stimulus is appropriate, but what is clear is that the U.S. fiscal support so far during the pandemic outranks nearly every industrialized country.
3 min readA Holiday Tradition: Tax Extenders Slated to Expire at End of 2021
Tax extenders this year can be split into three rough groups: expiring parts of the Tax Cuts and Jobs Act (TCJA), expiring parts of various COVID-19 economic relief packages, and the Island of Misfit Extenders.
8 min readGift or Lump of Coal: U.S. Cross-border Tax Changes Won’t Be Home for Christmas
As 2021 comes to a close, countries are moving toward harmonizing tax rules for multinationals, but stalled talks on the Build Back Better Act in the United States means new uncertainties for a global agreement and for taxpayers.
5 min readWhat Do Global Minimum Tax Rules Mean for Corporate Tax Policies?
The new OECD global minimum tax rules are complex, and some countries may opt to put them in place on top of preexisting rules for taxing multinational companies. However, countries should also consider ways to reform their existing rules in response to the minimum tax.
7 min readPermanent Build Back Better Act Would Likely Require Large Tax Increases on the Middle Class
Policymakers and taxpayers should understand the scope of tax changes necessary to fully pay for the large-scale social spending programs that would be initiated under the Build Back Better Act.
6 min readPatching Spain’s Tax Code Won’t Attract Investors
Spain should follow the example of Madrid, the country’s most competitive region. A more efficient income tax system is a better objective than just focusing on incentives for foreigners to change their tax residence.
5 min readWho Really Pays the Tariffs? U.S. Firms and Consumers, Through Higher Prices
The bulk of economic evidence shows for most of the new tariffs imposed under the Trump administration, U.S. firms or consumers bore 100 percent, or even more, of the burden through lower profits or higher retail prices.
5 min readBuild Back Better Budget Deficits Could Mean More Inflation, More Policy Uncertainty
As the Senate weighs changes to the spending and tax portions of the Build Back Better Act, the Congressional Budget Office (CBO) and Tax Foundation find the bill would increase the cumulative budget deficit over the next 10 years—contrary to claims the legislation is “fully paid for.”
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