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.

Nebraska property tax relief plan including Nebraska property tax reform and Nebraska sales tax proposal
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Proposed Nebraska Property Tax Relief Plan Would Make Things Worse

Gov. Pillen is searching for tax burden relief. But his plan, which reportedly involves a two-tiered sales tax and the state’s assumption of most school funding responsibility, would have profound implications that even those most convinced of the urgency of property tax relief may find unworkable and unpalatable.

12 min read
Placing Biden Tax Proposals and Trump Tax Proposals in Historical Context Largest Tax Increase and Largest Tax Hike in History and Largest Tax Decrease and Largest Tax Cut in History
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Placing Biden and Trump Tax Proposals in Historical Context

From President Biden calling the Tax Cuts and Jobs Act the “largest tax cut in American history,” to former President Trump claiming that Biden “wants to raise your taxes by four times,” the campaign rhetoric on taxes may be sparking some confusion.

5 min read
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How Does the IRA’s Book Minimum Tax Affect 5G Competition?

A higher tax burden for private infrastructure investments like wireless spectrum, 5G technology, and machinery and equipment makes an existing problem worse—especially against the backdrop of outright state subsidies in countries like China.

6 min read
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The Latest on the Global Tax Agreement

The agreement represents a major change for tax competition, and many countries will be rethinking their tax policies for multinationals.

8 min read
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ARPA’s Tax Mandate Ruled Unconstitutional by Appellate Court

The Fifth Circuit has affirmed states’ authority over their respective tax policies and has asserted that the offset clause—often called the “Tax Mandate”—of the American Rescue Plan Act (ARPA) has enough fiscal impact on a state’s budget so as to be coercive, as opposed to incentivizing.

5 min read
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Evaluating Proposed Pennsylvania Income Tax Reforms

The proposal is a good example of what can be done to reduce tax burdens on residents if spending is constrained. There are real, tangible benefits associated with enacting this pro-growth reform that should not be discounted.

5 min read