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.

 

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Avenues for Property Tax Reform in North Carolina

When evaluating property tax reform options in North Carolina, only changes that restore balance—without distorting investment or shifting costs unfairly—will ensure the state’s local tax system supports, rather than hinders, continued prosperity.

8 min read
Policies to address rising housing costs including housing affordability and housing supply shortage
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Tax Policy Can Lower Housing Costs. Here’s How.

Some form of improved cost recovery for structures—whether full expensing, expensing with a per-unit cap, neutral cost recovery, or simply shortening the asset life of residential structures—is one of the most powerful pro-housing supply options available to federal policymakers.

5 min read
California Wealth Tax
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Would California’s Wealth Tax Be Temporary?

Proponents of a California wealth tax ballot initiative insist that the proposed wealth tax is temporary: a one-time 5 percent tax that can be paid upfront or over five years with deferral charges. Others are skeptical that the wealth tax would be allowed to expire.

6 min read
Louisiana Sales Tax
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Why Centralizing Louisiana’s Sales Tax Collection Is Smart

Enacting centralized sales tax collection and administration in Louisiana will help simplify the sales tax code and alleviate one of the issues that make it the least competitive sales tax regime in the country.

4 min read
Colorado Income Tax Proposal, Alternative Minimum Tax (AMT), Net Operating Loss Deduction (NOL)
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Colorado Considers Legislation to Tax Phantom Income

Under HB26-1221, Colorado would make two changes that raise additional revenue by taxing income that doesn’t actually exist. The proposed changes to the state’s alternative minimum tax and net operating loss provisions are designed to overstate income, leading to double taxation and distorting taxpayer behavior.

5 min read
Historical corporate tax rates and brackets. Explore the latest data on historical federal corporate income tax rates and brackets. Corporation tax rates history
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Short Form

Why Is My Tax Refund Larger This Year?

If you’ve filed your taxes already, you may have noticed a larger refund this year. That’s due to changes Congress made with the One Big Beautiful Bill Act (OBBBA) last year that retroactively cut taxes for 2025.

3 min read