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.
![EU tobacco tax directive EU cigarette tax rates 2021 VAT EU reforms](https://taxfoundation.org/wp-content/uploads/2021/09/Europe-global-map-3-300x183.jpg)
A 15 Percent VAT Rate Is Possible by Scrapping Reduced Rates
A VAT tax reform that eliminates VAT reduced rates would decrease compliance costs and allow for a more rapid economic recovery. Policymakers should focus on simplifying VAT rules and making them more efficient and neutral by broadening their tax bases and eliminating reduced rates and unnecessary tax exemptions.
4 min read![House tobacco proposal Bidens tax pledge House Democrats' tobacco tax increased taxes on vaping, increased taxes on smoking, tax on vaping, tax on smoking, merkley, romney, e-cigarette taxes](https://taxfoundation.org/wp-content/uploads/2019/10/linkedin-In-Stream_Wide___capitol-us-capitol-hearing-event-federal-e1571258626690-300x158.jpeg)
House Tobacco Proposals Defy Biden’s Tax Pledge and Undermine Harm Reduction Efforts
House Democrats’ newly released $3.5 trillion tax legislation includes a tax increase on tobacco, nicotine, and vapor products levied on tobacco manufacturers. But ultimately it would fall heavily on tobacco consumers—many of the group that earns less than $400,000 that President Biden pledged would not see a tax increase.
6 min read![Tax on stock buybacks Wyden stock buybacks tax Tax Cuts and Jobs Act, House Ways and Means, temporary tax policy](https://taxfoundation.org/wp-content/uploads/2017/01/flickr_-_uscapitol_-_east_fron-300x215.jpg)
Tax on Stock Buybacks a Misguided Way to Encourage Investment
Research shows that a tax on stock buybacks would not be the right policy solution to encourage long-term investment or lift wages.
4 min read![Church taxes, tax churches, what if we taxed churches? #Taxthechurches, tax treatment of churches in the US. If taxes paid taxes, taxing churches](https://taxfoundation.org/wp-content/uploads/2021/09/Church-taxes-tax-churches-what-if-we-taxed-churches-Taxthechurches-tax-treatment-of-churches-in-the-US.-If-taxes-paid-taxes-300x200.jpg)
What If We Taxed Churches?
Whether spurred by a belief that government is improperly favoring religious institutions, an antipathy to wealthy celebrity pastors, or a hope that taxing houses of worship could bring down personal tax bills, the taxation of religious bodies is hotly debated online, but barely on the radar of actual elected officials. But is that true? How much, if any, tax revenue is forgone, and what do the policies look like?
7 min read![Infrastructure bill taxes inflation pressure on inflation returns to work incentives](https://taxfoundation.org/wp-content/uploads/2021/09/Infrastructure-bill-taxes-inflation-pressure-on-inflation-returns-to-work-incentives-e1631218170732-300x203.jpg)
Tax Reform and Infrastructure Investment: The Two Theories
The Biden administration does have a point about how some components of the infrastructure bill could put downward pressure on inflation in the long term. However, the taxes chosen to pay for those investments would counteract those effects, by reducing investment and productivity growth.
4 min read![Maryland digital advertising tax litigation Maryland internet freedom actregulations Maryland digital advertisement tax, Maryland digital tax, Maryland digital advertising tax](https://taxfoundation.org/wp-content/uploads/2020/03/linkedin-In-Stream_Wide___Maryland-annapolis-capitol-e1583940370364-300x158.jpeg)
Three Issues with Proposed Regulations for Maryland’s Digital Advertising Tax
Earlier this year, Maryland legislators overrode Governor Larry Hogan’s (R) veto of HB732, approving a digital advertising tax, the first of its kind in the country. But legislators punted several crucial questions to the state comptroller, who last week submitted proposed regulations for the digital advertising tax to the state Joint Committee on Administrative, Executive, and Legislative Review.
9 min read![US drug pricing policies and proposals HR3 drug pricing reform tax](https://taxfoundation.org/wp-content/uploads/2021/09/US-drug-pricing-policies-and-proposals-HR3-tax-proposals-e1631130955999-300x200.jpg)
Don’t Copy European Drug Pricing Policies that Reduced R&D and Innovation
Rather than pursuing policies that have demonstrably reduced R&D and innovation elsewhere, and that would disincentivize R&D in the U.S., lawmakers should continue to ensure an ecosystem that encourages risk-taking and R&D.
4 min read![American Rescue Plan state tax cuts treasury clarification on American Rescue Plan ban on state tax cuts. Treasury minimum tax on current minimum tax on foreign profits of U.S. companies](https://taxfoundation.org/wp-content/uploads/2018/12/AdobeStock_82143769-e1576168823228-300x200.jpeg)
Treasury Minimum Tax Argument Relies on Narrow Interpretation of Current/Proposed Rules
As Congress prepares to rewrite some portion of the current international tax rules, it’s hoped that they are able to achieve a more principled approach and one that is not so subject to obfuscation and misinterpretation.
7 min read![Learn more about the HR 3 prescription drug bill (the Elijah Cummings Lower Drug Costs Now Act) and how it could reduce R&D spending and medical innovation. See more on pharmaceutical company revenues, emerging biopharma companies, and HR3 bill text.](https://taxfoundation.org/wp-content/uploads/2021/09/RD-spending-and-medical-innovation-300x200.jpg)
H.R. 3 Would Reduce R&D Spending and Medical Innovation
Lawmakers are considering policy changes within the reconciliation bill that would reduce private R&D within the pharmaceutical industry and reduce the number of new drugs coming to market. Instead of hampering medical progress, policymakers should work to ensure that the tax code remains conducive to R&D spending and the resulting innovation.
5 min read![Wyden tax proposals reconciliation Wyden tax reconciliation](https://taxfoundation.org/wp-content/uploads/2021/09/Wyden-tax-proposals-reconciliation-e1631047656981-300x237.jpg)
Reviewing Wyden’s Reconciliation Tax Policy Proposals
Congressional lawmakers are putting together a reconciliation bill to enact much of President Biden’s Build Back Better agenda. Many lawmakers including Senate Finance Committee Chair Ron Wyden (D-OR), however, want to make their own mark on the legislation.
5 min read