How GILTI Are U.S. Industries?
Both the Biden campaign and some Democratic members of Congress have recommended changes to GILTI, but before doing that, policymakers should consider how GILTI’s design can have ramifications for many U.S. companies and their tax burdens.
6 min read
Tax Policy Improvements Needed to Help Industries through the Semiconductor Shortage
As lawmakers evaluate how to respond to the global semiconductor shortage, they should consider allowing full cost recovery across all types of capital investment—inventories, machinery and equipment, structures, and R&D.
4 min read
The American Rescue Plan Act Greatly Expands Benefits through the Tax Code in 2021
The major tax-related benefits in the $1.9 trillion economic relief plan are a third round of direct payments, extended unemployment insurance (UI) benefits and a $10,200 unemployment insurance income exemption for 2020, and an expansion of the Child Tax Credit.
6 min read
Wyden’s Energy Tax Proposal a Mixed Bag
As the Biden administration turns toward infrastructure, Sen. Ron Wyden (D-Or.) has suggested including reforms to the way the tax code subsidizes energy production in such a package, eliminating 44 “tax breaks” for various activities in the energy sector and replacing them with only three.
3 min read
Does the American Rescue Plan Ban State Tax Cuts?
Senate amendments to the American Rescue Plan Act prohibit using any of the $350 billion in State and Local Fiscal Recovery Funds to cut taxes, but many are concerned that states which accept the funds could be prohibited from implementing tax cuts between now and 2024—an astonishing level of federal interference in states’ fiscal affairs.
8 min read
Phasing in a Corporate Rate Hike Would Be the Worst of Both Worlds
The Biden administration has signaled its openness to raising the corporate tax rate, potentially by phasing in an increase over several years. While phasing in a tax increase, as opposed to hiking immediately, may seem like a reasonable middle ground, it would be the worst of both worlds because it provides old investment with a lower rate while penalizing new investment.
2 min read
Kentucky’s Century-Old Gas Tax Is Failing to Keep Up with Road Funding Needs
For the fourth year in a row, a comprehensive infrastructure funding reform bill has been introduced in Kentucky, with the centerpiece being a gas tax increase of 8.6 cents per gallon (cpg). Like many states, Kentucky faces a backlog of road maintenance and construction projects, and existing transportation taxes and user fees are failing to keep pace with funding needs.
4 min read
Senate Direct Payment Design Would Create High Implicit Marginal Tax Rates
As the Senate debates the relief package and makes progress in the budget reconciliation process, policymakers should keep in mind the trade-off between targeted economic relief and increasing marginal tax rates in the tax code, which can distort incentives to earn income and induce taxpayers to creatively adjust their AGI to receive a payment in the next tax season.
4 min read
New Hampshire Bill Aims to Reduce Tax Burden on Businesses
A year ago, it seemed possible that New Hampshire was headed toward a triggered tax increase. Instead, lawmakers may trim business tax rates and begin the phaseout of the state’s tax on interest and dividend income, which would take away the asterisk and make New Hampshire the ninth state to forgo an individual income tax altogether.
4 min read
Tax Incentives for Digital Nomads and Remote Workers
Policy changes to attract foreigners are not without benefits, but governments should carefully weigh the costs of the tax incentives against opportunities to implement broader tax reforms. A more efficient income tax system is a better objective than just focusing on incentives for foreigners to change their tax residence.
4 min read