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.
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
Delaware Proposes Higher Tobacco Taxes, Risking Regressivity and Revenue Volatility
Delaware Governor Matt Meyer (D) has proposed a new state budget that includes roughly $18.9 million in additional annual revenue from higher tobacco taxes.
4 min read
New Mexico Could Backslide If It Decouples from Pro-Growth Tax Policy
New Mexico’s SB 151 decouples from the OBBBA’s full expensing provision, making the state’s tax climate less competitive.
4 min read
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
A Competitive Tax Code Doesn’t Have to Sacrifice Revenue
Structural reforms such as broadening tax bases, improving cost recovery, and shifting toward less distortive taxes can improve competitiveness without necessarily reducing revenue.
7 min read
How Much Revenue Would Senator Sanders’ Wealth Tax Proposal Really Raise?
Senator Bernie Sanders introduced a proposed 5 percent annual wealth tax on billionaires to fund direct payments to Americans and expand social welfare programs.
5 min read
Ohio Expensing Conformity Will Boost Innovation and Competitiveness
Ohio’s SB 9 will boost economic growth by conforming Ohio’s tax code to the domestic research and experimentation (R&E) immediate cost recovery provision in the One Big Beautiful Bill Act.
8 min read
Pharmaceutical Tariffs Would Add Costs and Reduce Innovation
Thought the Trump administration has not yet imposed new, industry-specific tariffs on drugs or active pharmaceutical ingredients, such tariffs would be a hidden cost on Americans: they would shrink incomes, reduce investment, and lead to less innovation.
7 min read
FAQs About Border Adjustment
What is a border adjustment? Is it a new idea? How would it work in practice?
11 min read
Utah’s Digital Ad Tax, by Any Other Name, Is Just as Legally Fraught
A digital advertising tax in Utah will increase costs for Utah businesses and expose the state to complicated legal battles.
4 min read