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.

GILTI by country not as simple
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Biden’s Call for More Tax Credits Further Complicates the Tax Code

Over the course of the 2020 presidential election campaign, Democratic nominee Joe Biden has proposed new tax credits for health insurance, child care, elderly care, and homeownership, in addition to expansions of the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC).

3 min read
Spain Recovery Plan Tax Hikes 2020 Spanish Regional Tax Competitiveness Index, Spain economic recovery, Spain recovery budget, Spain recovery plan
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Spain’s Recovery Budget Comes with Tax Hikes

While other countries in Europe are working towards introducing tax cuts and stimulating economic recovery by supporting business investment and employment, Spain is putting more fiscal pressure on households and businesses.

4 min read
Zoom Video Communications, Zoom Video Calls, Zoom Calls, Zoom tax
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Zoom Calls Not a Taxing Matter

Zoom Video Communications announced that, come November, the company will start collecting and remitting local utility and communications taxes in California, New York, Maryland, and Virginia.

5 min read
Biden’s tax plan would be the one of the largest tax increase since the 1940s and one of the largest tax increases not associated with wartime funding, Biden's tax plan in historical context
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Placing Joe Biden’s Tax Increases in Historical Context

If we consider Biden’s tax plan over the entire budget window (2021 to 2030) as a percentage of GDP—1.30 percent—it would rank as the 6th largest tax increase since the 1940s and and one of the largest tax increases not associated with wartime funding.

6 min read
Blog

The UN Approach on Digital Taxation

The UN tax committee will be considering a change to the UN’s model tax treaty that, if adopted and implemented, could result in digital companies paying more taxes in countries where their customers are located even if those companies do not have physical locations there.

5 min read