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.
Why Neutral Cost Recovery Matters
Allowing full deductibility of residential structures would mean more housing construction, particularly multifamily housing—a practical solution to address housing affordability challenges.
6 min readIncome Tax Earmarking and Grocery Taxes on the Ballot in Utah
Utah is the only state to earmark the entirety of one of its major taxes, but a measure on the ballot this November might change that.
4 min readAnalysis of Harris’s Billionaire Minimum Tax on Unrealized Capital Gains
In her campaign for president, VP Kamala Harris has embraced all the tax increases President Biden proposed in the White House FY 2025 budget—including a new idea that would require taxpayers with net wealth above $100 million to pay a minimum tax on their unrealized capital gains from assets such as stocks, bonds, or privately held companies.
5 min readNorth Dakota Considers Eliminating Property Taxes
Eliminating the property tax will unfortunately set North Dakota back in significant ways, making the state a national outlier and eroding regional competitiveness.
6 min readHow World War II Reshaped US Taxation
World War II shaped many aspects of the modern world, including the US tax code. But the dramatic changes to our system that military mobilization required didn’t subside when the fighting finished; they’ve persisted to today.
4 min readMeals Taxes across the Nation
States would do better to broaden the sales tax base to include currently exempt classes of final consumption than to impose disproportionate taxes on prepared foods.
6 min read10 Less Harmful Ways of Raising Federal Revenues
If lawmakers are convinced that new revenues must be part of any long-term effort to solve the budget crisis or offset the cost of extending the TCJA, they must choose the least harmful ways of raising new revenues or else risk undermining their efforts by slowing economic growth.
7 min readHow Do Import Tariffs Affect Exports?
When the government imposes a tariff, it may be trading jobs and production in one part of the economy for jobs in another part of the economy by increasing production costs for downstream industries.
6 min readThe Corporate Tax Rate Tug-of-War
Depending on the 2024 US election, the current corporate tax rate of 21 percent could be in for a change. See the modeling here.
4 min readNew York Budget Gap Narrows, but No Long-Term Solution in Sight
The recently released FY 2025 budget for New York State signals a degree of optimism, with caveats. New York cannot tax itself toward a balanced budget.
6 min read