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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How the HEROES Act Would Allocate State and Local Aid for Coronavirus Relief
The HEROES Act would provide more than $1 trillion to state and local governments. Here’s how funding would be distributed and provisional estimates of how much aid each state would receive.
5 min read![](https://taxfoundation.org/wp-content/uploads/2020/04/California-golden-gate-e1587750341429-300x200.jpg)
![LIFO tax treatment of inventory LIFO repeal US supply chain resiliency Biden small business taxes Biden tax plan small business impact Investments in long-lived assets, such as structures, must be deducted over long cost recovery periods: up to 27.5 years (for residential buildings) or 39 years (for nonresidential buildings), cost recovery of buildings.](https://taxfoundation.org/wp-content/uploads/2020/01/Building-structures-factory-crop-e1578339573862-300x172.jpeg)
Reducing the Bias Against Long-term Investments
Other countries have shown that providing deductions in line with invested capital costs can have positive impacts both on investment and on debt bias.
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Alabama, Missouri Bills Would Exempt CARES Relief from Income Tax Calculation
Alabama and Missouri are considering excluding the CARES Act Economic Impact Payments from being taxed and exclude them from state income tax calculations.
2 min read![Maryland digital advertising tax litigation Maryland internet freedom actregulations Maryland digital advertisement tax, Maryland digital tax, Maryland digital advertising tax](https://taxfoundation.org/wp-content/uploads/2020/03/linkedin-In-Stream_Wide___Maryland-annapolis-capitol-e1583940370364-300x158.jpeg)
Gov. Hogan Vetoes Maryland Digital Advertising Tax Legislation
Gov. Hogan vetoed a proposed first-in-the-nation digital advertising tax that would have imposed rates of up to 10 percent on digital advertising served to Marylanders.
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Watch: Coronavirus: A Path to Economic Recovery
What challenges should we expect to face as the U.S. economy begins to re-open? When is the right time for legislators to start focusing on long-term recovery vs. short-term needs? What policies should federal legislators pursue to clear a path to recovery?
1 min read![White House considers capital gains tax cut, neutral cost recovery, full expensing amid coronavirus economic relief options, coronavirus business relief](https://taxfoundation.org/wp-content/uploads/2020/05/neutral-cost-recovery-vs-capital-gains-300x220.png)
White House Considers Neutral Cost Recovery for Structures
When considering long-term policies for increasing long-run levels of investment and economic growth, full expensing and neutral cost recovery are better targeted than policies like a capital gains cut.
6 min read![OECD Pillar 1 Amount A proposal OECD Secretariat, OECD unified approach pillar 1, OECD pillar 1, OECD international tax, OECD unified approach digital tax, OECD multinational businesses, OECD digital tax](https://taxfoundation.org/wp-content/uploads/2019/10/flag-oecd-international-3-e1571950955538-300x200.jpeg)
Chaos to the Left of Me. Chaos to the Right of me.
The OECD recently announced that the negotiation timeline for new digital tax proposals has now been pushed back to October due to the COVID-19 pandemic, although the end-of-year deadline for the overall project is still in place.
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![expensing leads to more investment and higher employment, full expensing, 100 percent expensing, 100 percent bonus depreciation, does not replace workers with machines, does not replace workers with robots](https://taxfoundation.org/wp-content/uploads/2020/05/business-factory-worker-equipment-machinery-e1589904093669-300x200.jpeg)
Reviewing the Economic and Revenue Implications of Cost Recovery Options
Permanent full expensing for all types of investment is an effective policy change lawmakers can use to encourage additional investment and economic growth.
9 min read