While a sweeping tax policy bill is unlikely in the near future, lawmakers may be able to come together on a smaller scale. Pairing better cost recovery on a permanent basis with support for vulnerable households as well as additional pandemic-related relief would help promote a more rapid return to growth and help businesses and households weather the ongoing crisis.
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At the end of 2020, 33 temporary tax provisions are scheduled to expire at the federal level. These provisions generally fall under four categories: cost recovery, energy, individual, and other business provisions.
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Patent box regimes (also referred to as intellectual property, or IP, regimes) provide lower effective tax rates on income derived from IP.
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President Biden may make greater use of regulatory changes to modify how tax law is interpreted and administered. There are several areas where a Biden Treasury Department, likely led by former Federal Reserve Chair Janet Yellen, may focus.
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Mississippi Governor Tate Reeves (R), in his budget proposal for fiscal year (FY) 2022, has announced his goal of phasing out the state’s income tax by 2030.
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New York already suffers from significant smuggling of untaxed tobacco products—smuggled cigarettes accounted for 53 percent of cigarettes consumed in the state in 2018—and further increasing tobacco taxes is likely to make matters worse.
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Excessive tax rates on cigarettes in some states induce substantial black and gray market movement of tobacco products into high-tax states from low-tax states or foreign sources. New York has the highest inbound smuggling activity, with an estimated 53.2 percent of cigarettes consumed in the state deriving from smuggled sources.
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Economists have proposed taxing corporate income more uniformly through corporate integration, which can be done in a variety of ways. Biden’s plan goes in the opposite direction by making worse the double taxation of corporate income.
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International tax rules define how income earned abroad and by foreign entities are taxed domestically, making them an important element of a country’s tax code.
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