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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Inflation-Indexing a Useful Tool to Protect New Jersey Taxpayers

Households across the country are struggling with the effects of high inflation. Lawmakers in New Jersey are looking to combat an unlegislated tax increase by indexing the state’s individual income tax code for inflation, something all states should consider.

3 min read
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Will Kentucky Build Upon Its 2018 Reforms This Year?

As Kentucky policymakers make final decisions on tax relief this year, they should make the most of this opportunity to return excess tax collections in a manner that would also enhance the Bluegrass State’s prospects for long-term economic growth.

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Windfall Profits Tax Wrong for American Energy

As oil prices skyrocket, a windfall profits tax targeted at oil company profits could punish domestic production and increase reliance on imports.

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Europe

Russia’s Ukrainian War Could Impact EU Carbon Proposal Too

Given the uncertainty surrounding the war in Ukraine, future trade relations with Russia, and the overall CBAM revenue structure. The EU will need to adjust policy when challenges arise as it looks to increase its role in fiscal affairs through new own resources.

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To Stimulate R&D Investment, Stop Penalizing it in the Tax Code

In his State of the Union Address, President Biden called for leveling the global research & development (R&D) playing field by increasing federal R&D spending, specifically by asking Congress to pass the bipartisan United States Innovation and Competition Act (USICA).

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Accounting for the Global Minimum Tax

Double taxation impacts the ability of companies to invest valuable things like improving their supply chains, developing new products, and hiring workers, and it can be fixed if the minimum tax uses a country’s own tax rate.

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Iowa tax reform including Iowa property tax reform Governor Kim Reynolds
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Iowa Enacts Sweeping Tax Reform

Even if 2022 sees many tax reforms, the scope of Iowa’s tax relief measures is likely to stand out. With the most recent reform package, Iowa lawmakers have made a significant investment in a more competitive tax climate for an increasingly competitive era.

6 min read