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.
![Reconciliation bill tax innovation](https://taxfoundation.org/wp-content/uploads/2019/02/invent-innovation-e1549386148253-300x200.jpg)
New Study Shows Tax Policy Has Strong Effects on Innovation
When examining how tax policy impacts the economy, researchers typically look at labor supply and investment responses. One other channel through which taxes impact the economy has been less studied: innovation.
3 min read![Billionaires tax on capital gains tax proposal reconciliation tax plan net wealth of fortunate 400 most wealthy taxpayers](https://taxfoundation.org/wp-content/uploads/2021/10/Billionaires-tax-on-capital-gains-tax-proposal-reconciliation-tax-plan-net-wealth-of-fortunate-400-most-wealthy-taxpayers3-300x212.png)
The Rich Are Not Monolithic and Taxing Their Wealth Invites Tax Collection Volatility
Congressional Democrats are reported to be weighing a special tax on the assets of billionaires to raise revenues to pay for their Build Back Better spending plan. There are two fundamental challenges to such a plan.
7 min read![Biden research and development tax treatment of R&D expenses R&D expensing R&D tax treatment in the US US COVID19 fiscal response Comparing fiscal responses to the pandemic House Democrats tax plan US competitiveness Build Back Better Act reconciliation bill](https://taxfoundation.org/wp-content/uploads/2020/04/us-flag-34-300x169.jpg)
How Would House Dems’ Tax Plan Change Competitiveness of U.S. Tax Code?
The legislation put forward by Democratic members of the House of Representatives would reverse many of the 2017 reforms while increasing burdens on businesses and workers.
2 min read![Washington capital gains income tax Washington capital gains tax 2021 Washington election results ballot measures Washington State Lawmakers Floats a Wealth Tax Which Relies Almost Exclusively on Four People, Washington wealth tax proposal, Washington State wealth tax](https://taxfoundation.org/wp-content/uploads/2021/01/Washington-state-capitol-e1611931281801-300x167.jpeg)
Washington Voters to Weigh in on New Capital Gains Income Tax
On May 4th, Gov. Jay Inslee (D) signed legislation creating a 7 percent capital gains tax, to take effect next year. On November 2nd, Washington lawmakers will learn what voters think about it.
5 min read![Lawmakers Could Pay for Reconciliation While Improving the Tax Code, pay for reconciliation tax proposal](https://taxfoundation.org/wp-content/uploads/2021/10/AdobeStock_75343984-300x167.jpeg)
Lawmakers Could Pay for Reconciliation While Improving the Tax Code
With corporate and individual rate hikes potentially out of the Build Back Better (BBB) reconciliation package, lawmakers are weighing alternative options to raise revenue. Rather than come up with untested proposals and complicated changes to the tax base, they should prioritize options that raise revenue while improving the structure of the tax code.
4 min read![Tracking the 2021 Biden Tax Plan](https://taxfoundation.org/wp-content/uploads/2021/06/Biden-tax-plan-Biden-2021-tax-plan-tracker-e1623848792294-300x200.jpeg)
Proposed Minimum Tax on Book Income Would Hit Stock-Based Compensation
Raising taxes on stock-based compensation through a book income tax will disadvantage this form of compensation and produce more complexity in the tax system without providing benefits to workers.
5 min read![Colorado proposition 121 Colorado proposition FF Colorado income tax reduction or cut election results 2021 tax ballot measures Colorado proposition 119 Colorado proposition 120 Colorado proposition CC, Colorado TABOR, Colorado public education, Colorado education funding](https://taxfoundation.org/wp-content/uploads/2019/10/Colorado-capitol-3-e1570734931243-300x200.jpeg)
![Biden tax plan and analysis of Biden taxes Biden minimum tax on billionaires unrealized capital gains tax Biden tax proposals Biden taxes Biden tax plan Build Back Better inflation tax Biden inflation tax Top Tax Rate on Personal Income Would Be Highest in OECD under New Build Back Better Framework](https://taxfoundation.org/wp-content/uploads/2021/10/Washington-DC-White-House-skyline-e1634657027264-300x200.jpeg)
Funding for Democrats’ $3.5 Trillion Spending Plan Is Unstable and Unsustainable
One has to wonder how stable or sustainable the Democrats’ spending program can be if it must rely so heavily on the taxes paid by such a small number of taxpayers as in the top 1 percent.
4 min read![](https://taxfoundation.org/wp-content/uploads/2021/10/Louisiana-tax-reform-e1634834768922-300x225.jpeg)
Louisiana Voters Have Chance to Simplify Taxes and Lower Burdens
Passage of Louisiana Amendments 1 and 2, which are aimed at the sales tax and individual and corporate income taxes, respectively, would substantially simplify the Pelican State’s tax code and provide tax relief in both the short and long term.
8 min read![Israel income tax system, Taxes in Israel](https://taxfoundation.org/wp-content/uploads/2020/08/Tel-Aviv-Israel-300x225.jpg)
Movers and Shakers in the International Tax Competitiveness Index
The Index provides lessons for policymakers when they are thinking of ways to remove distortions from their tax systems and remain competitive against their peers. The further up a country moves on the Index, the more likely it is to have broader tax bases, relatively lower rates, and policies that are less distortionary to individual or business decisions. Going the other way reveals a policy preference for narrow tax bases, special tax policy tools, and rules that make it difficult for compliance.
5 min read