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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Wisconsin’s Surplus Presents Opportunity for Down Payment on Future Economic Growth

As Wisconsin emerges from the pandemic, state policymakers have a rare opportunity to reinvest excess revenues in a structurally sound manner that will make the state more attractive to individuals and businesses, promote a quicker and more robust economic recovery, and put the state on the path to increased in-state investment and growth for many years to come.

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A Closer Look at Eliminating the AMT

In our new Options for Reforming America’s Tax Code 2.0, there are several options that would simplify the tax code, including eliminating the alternative minimum tax (AMT). While this move would remove a source of complexity, policymakers should also consider reforming the deductions that created a justification for the AMT in the first place.

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Explaining the GAAP between Book and Taxable Income

A recent study identifies dozens of large companies that paid no income taxes in 2020. While such studies get headlines and may seem shocking, the reality is much more mundane.

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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.

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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.

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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.

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