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.

Tax Cuts and Jobs Act offshoring OECD BEPS project, OECD consultation document, OECD multinationals, Consumption tax policies in OECD countries, Consumption taxes in OECD countries
Blog

Digital Tax Deadlock: Where Do We Go from Here?

We recently hosted an exclusive webinar discussion to get up to speed on recent digital tax developments and gain insight from leading international tax experts on the OECD’s BEPS project.

9 min read
Did 1986 tax reform hurt affordable housing
Blog

Did 1986 Tax Reform Hurt Affordable Housing?

Improving cost recovery for residential structures, while not a silver bullet for solving the housing crisis, would on the margin encourage more construction that would help push rents down across the board.

4 min read
Blog

Iowa Decouples from 163(j) and GILTI, Clarifies Non-Taxation of PPP Loans

Iowa’s HF 2614, which passed both chambers of the legislature and now waits for the governor’s signature, makes several changes to the state’s tax code, which, although they will affect revenue, will encourage economic growth and make the state’s tax code more competitive.

4 min read
Pennsylvania legalize marijuana, Pennsylvania recreational marijuana tax, New Mexico legalize marijuana, New Mexico recreational marijuana tax, states taxing marijuana
Blog

Montana Voters Will Decide on Recreational Marijuana

Montana could vote to legalize and tax recreational marijuana in November, bringing in an estimated $39 million by 2025, but would the move help with short-term budget issues?

4 min read
federal government response to coronavirus, simplify next round of rebates, GAO report
Blog

GAO Report Reveals Need to Simplify Next Round of Rebates

A new Government Accountability Office (GAO) report revealed that almost a half-million taxpayers missed their total rebate payment due to complications over disbursing funds to non-filers with eligible dependents. Administrability is just as important as rebate design and simplicity is just as important as speed.

3 min read
Blog

Why Neutral Cost Recovery Is Good for Workers

Studies have shown that accelerated depreciation helps increase wage growth. A recent report found that states that implemented accelerated depreciation in their tax codes led to a 2.5 percent increase in compensation per employee in manufacturing, relative to states that did not.

3 min read