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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.

2017 tax reform Tax Cuts and Jobs Act TCJA changed legal business forms like c corporations and pass-through businesses TCJA Pass-Through Business Tax Reform: Details & Analysis

How the TCJA Affected Legal Business Forms

The Tax Cuts and Jobs Act (TCJA) significantly lowered the effective tax rates on business income, but the impact was not the same for C corporations and pass-through businesses.

6 min read
Donald Trump tax proposals regarding replacing the income tax with tariffs, exempting taxes on tips, and corporate income tax cut

Five Things to Know about Trump’s Tariff and Income Tax Proposals

Former President Trump floated the possibility of entirely replacing the federal income tax with new tariffs. He also raised other ideas like eliminating taxes on tipped income and lowering the corporate tax rate by one percentage point.

8 min read
National Tax Poll Results and Answers: Understanding the Tax Code

National Tax Literacy Poll: Understanding the Tax Code

To make sound financial decisions and support better tax policy, taxpayers should understand the taxes they face. Unfortunately, most U.S. taxpayers do not know or are unsure of basic tax concepts.

6 min read