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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Ohio Lawmakers Ponder Tax Relief after Rosy Revenue Outlook

Ohio is one of a growing number of states which experienced revenue increases despite the economic slowdown from the coronavirus pandemic and is now looking to return some of that through tax relief.

5 min read
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Montana Adopts Individual and Corporate Income Tax Reform

Montana adopted structural reforms to both individual and corporate income taxes during the recently adjourned legislative session, enacting three bills reducing individual tax rates, simplifying the state’s individual tax system, repealing 16 tax credits, and changing the apportionment factor for corporate income tax.

5 min read
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Less Should be MORE with Federal Cannabis Taxation

Federal lawmakers re-introduced the MORE Act, the most significant federal legislative development on marijuana policy in 50 years. The MORE Act would impose a federal excise tax on marijuana at a rate from 5 to 8 percent.

7 min read
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Arizona Legislators Consider Lower, Flatter Income Tax

The income tax changes in HB 2900 as introduced would improve Arizona’s individual income tax structure and economic competitiveness, making the state more attractive to individuals and pass-through businesses .

8 min read
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Oklahoma Passes Corporate and Individual Income Tax Reductions

Last Friday, Oklahoma Governor Kevin Stitt (R) signed House Bills 2960, 2962, and 2963 into law as part of a budget agreement, bringing the legislature’s tax plans across the finish line. These bills will reduce the state’s corporate and individual income tax rates beginning in tax year 2022.

3 min read
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CBO Report on R&D and Tax Policy in the Pharmaceutical Industry

In a new report, the Congressional Budget Office (CBO) analyzes federal policies that influence R&D spending in the pharmaceutical industry. The report highlights how taxes affect R&D investment incentives, underscoring the importance of structuring the tax code so that it is not biased against investment.

4 min read