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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Arkansas Lieutenant Governor Looks to Eliminate Income Tax

Lt. Governor Griffin’s goal to eliminate the income tax is a commendable one that should be considered with cautious optimism, though with the understanding that even a well-designed process may end up putting more weight on an already uncompetitive sales tax. In the meantime, there is plenty of space for incremental improvements in Arkansas’s income tax that will make the state more competitive.

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2020 Spanish Regional Tax Competitiveness Index

The Regional Tax Competitiveness Index (RTCI) for Spain allows policymakers, businesses, and taxpayers to evaluate and measure how their regions’ tax systems compare. This Index has been designed to analyze how well regions structure their tax system. Additionally, it serves as a road map for policymakers to reform their tax systems and make their regions more competitive and attractive for entrepreneurs and residents.

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What Federal Policymakers Can Learn from Business Tax Refunds in 2020

Policymakers should consider finding ways to simplify the administration of relief during future crises. This will help ensure the relief is timely and targeted, key components of any successful relief package for this crisis or crises in the future.

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Additional Pandemic Relief Might Be Taking Shape

With days left until government funding runs out, congressional lawmakers are down to the wire to fund the government and provide additional pandemic-related relief to the households and businesses trying to make it through the winter.

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Poland Borrows an Idea from Estonia’s Tax System, but Misses the Point

It’s important for Poland to understand the main lesson of the Estonian approach: taxes should be designed with an overarching approach to maximize neutrality and minimize complexity and distortions. Instead of simply adopting a preference for small businesses, the Polish government should instead overhaul its corporate tax rules and truly adopt the Estonian approach to taxation.

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