One of the ways lawmakers intend to pay for $3.5 trillion of new spending in the budget reconciliation package is by creating “health care savings.” The leading proposal to achieve this is H.R. 3, the Elijah Cummings Lower Drug Costs Now Act, which would change the way that prescription drug prices are negotiated under Medicare Part D.
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It is important to understand how the SALT deduction’s benefits have changed since the SALT cap was put into place in 2018 before repealing the cap or making the deduction more generous. Doing so would disproportionately benefit higher earners, making the tax code more regressive.
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How do current federal corporate tax rates and brackets compare historically?
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How do current federal individual income tax rates and brackets compare historically?
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There are many ways the U.S.’s international tax rules could be changed, reformed, improved, or worsened. Reflexively jacking up taxes on U.S. multinationals does not necessarily accomplish the goal of reducing or eliminating profit shifting, and it would in fact worsen it.
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The Biden administration recently cited an analysis from Treasury claiming that “the President’s agenda will protect 97 percent of small business owners from income tax rate increases.” However, the figure is misleading. To assess the economic effect of higher marginal tax rates, it matters how much income or investment will be affected—not how many taxpayers.
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According to the Tax Policy Center, an estimated 60 percent of U.S. households paid no income tax in 2020, up from around 43 percent of households in 2019.
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Reviewing the sources of personal income shows that the personal income tax is largely a tax on labor, primarily because our personal income is mostly derived from labor. However, varied sources of capital income also play a role in American incomes. While capital income sources are small compared to labor income, they are still significant and need to be accounted for, both by policymakers trying to collect revenue efficiently and by those attempting to understand the distribution of personal income.
10 min read
As one might expect, southern European countries that are well-known for their wines—such as France, Greece, Portugal, and Spain—either don’t tax it or do so at a very low rate. But travel north and you’ll see countries that tend to levy taxes on wine—and often hefty taxes.
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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.
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