The Biden administration has announced a number of tax proposals to fund new government investments such as infrastructure, education and family programs as part of the Build Back Better (Building a Better America) agenda. From analyzing the Build Back Better Act and Inflation Reduction Act to the U.S. Treasury’s international tax proposals, Tax Foundation experts continue to serve as trusted thought leaders, providing research, modeling, analysis, and commentary on how the Biden plan would impact U.S. competitiveness, economic growth, tax revenue, and everyday taxpayers. The posts below include our research and analysis on a variety of Biden tax proposals. You can also explore our economic modeling via Options for Reforming America’s Tax Code and our 10 Tax Reforms for Growth and Opportunity.
According to our analysis, President Biden’s budget would reduce long-run economic output by about 1.3 percent and eliminate 335,000 FTE jobs. See what tax policies the president is proposing.
Instead of such a complex and inefficient system, policymakers should move to full expensing as part of the effort to build.
How will the Inflation Reduction Act taxes impact inflation, economic growth, tax revenue, and everyday taxpayers? See Inflation Reduction Act tax changes.
This interaction between the U.S. proposals and those that may be put into law in foreign jurisdictions should give lawmakers caution when evaluating the revenue potential of changes to GILTI.
The Inflation Reduction Act increases the IRS’s budget by roughly $80 billion over 10 years. The money is broken into four main categories—enforcement, operations support, business system modernization, and taxpayer services—as well as a few other small items such as an exploratory study on the potential of a free-file system.
In dollar terms, the industries that would account for the largest book minimum tax liabilities are manufacturing, at $73.2 billion, followed by finance, insurance, and management at $46.9 billion.
As increased political attention focuses on the state of the American worker, expect to see a resurgence of the argument that the labor share of income is in decline.
One prominent feature of President Biden’s agenda on the environment is to target U.S. fossil fuel producers and production with nearly $97 billion in tax increases over the next decade.
Now is the time for lawmakers to focus on long-term fiscal sustainability, as further delay will only make an eventual fiscal reckoning that much harder and more painful. Congressional leaders should follow through on convening a fiscal commission to deal with the long-term budgetary challenges facing the country.
Congress should reconsider key elements of the IRA, including the book minimum tax and the green energy credits, with an eye towards simplification and fiscal responsibility.
As the TCJA expiration nears, lawmakers face difficult choices in reforming the CTC. While revenue, distributional and economic effects are important, lawmakers should also focus on simplifying the rules and reducing the administrative challenges.
Starting on September 1st, federal student loan payments will resume after a three-and-a-half-year pause on payments and accrued interest following the onset of the COVID-19 pandemic.
It is hard to imagine the IRS Direct e-File Program operating seamlessly with the complexity of the current U.S. tax system. Instead, lawmakers should first address the more fundamental problem that causes taxpayer frustration: our highly complicated tax code.
The Trump administration imposed nearly $80 billion worth of new taxes on Americans by levying tariffs on thousands of products, amounting to one of the largest tax increases in decades. The Biden administration has so far kept most of the Trump administration tariffs in place.
Lawmakers should focus on simplifying the federal tax code, creating stability, and broadly improving economic incentives. There are incremental steps that can be made on the path to fundamental tax reform.
The agreement represents a major change for tax competition, and many countries will be rethinking their tax policies for multinationals in light of it. However, with both the U.S. and EU hitting roadblocks in their respective legislative processes, it is unclear when or even if the agreement will be implemented. If implementation fails, a return to a world of distortive European digital services taxes and retaliatory American tariffs could be on the horizon.
The price tag of the Inflation Reduction Act’s green energy tax credits is much higher than originally thought. Among other things, the updated analysis indicates the Inflation Reduction Act does not reduce deficits after all.
As the UTPR is a new concept, it is worth explaining what it is and why Rep. Smith cares about it. In a sentence, the Undertaxed Profits Rule (UTPR) is a looming extraterritorial enforcement mechanism for a tax base the U.S. has not adopted.
To address the more challenging parts of the budget, especially the unsustainable growth in mandatory spending, lawmakers should follow up on this debt ceiling agreement with a focus on long-term fiscal sustainability.
Any serious proposal to tackle the emerging debt and deficit crisis must also address our largest mandatory spending programs: Social Security and Medicare. Together, these two programs will be responsible for nearly 80 percent of the deficit’s rise between 2023 and 2032, according to Congressional Budget Office (CBO) projections.
Although the U.S. has a progressive tax system and a relatively low tax burden compared to the OECD average, average-wage workers still pay more than 30 percent of their wages in taxes.
A better-designed tax system should be a goal of any fiscal consolidation package. That said, our simulations suggest that even substantially higher tax increases are insufficient to curtail long-run debt-to-GDP growth.
Rather than continue down the path of growing debt, lawmakers should craft a comprehensive solution. International experience cautions against tax-based fiscal consolidations, but modest tax increases may be part of a successful debt reduction package.
According to the International Monetary Fund (IMF), the U.S. federal government is among the most indebted governments in the world.
As policymakers look to tackle America’s debt and deficit crisis, they should consider international experiences on successful fiscal consolidations.
In our latest report, we consider several theoretical arguments for carbon taxes and the evidence from carbon taxes implemented around the world related to emissions, economic growth, distribution and revenue recycling options, other environmental taxes, green subsidies, and environmental regulations.