Although sometimes overlooked in discussions about corporate taxation, capital cost recovery plays an important role in defining a business’s tax base and can impact investment decisions—with far-reaching economic consequences.
27 min readTax policy can help by giving businesses current access to future tax “assets”—deductions and credits the businesses will be allowed or owed over time any way under current law—instead of making them wait.
5 min read
Making 100 percent bonus depreciation permanent avoids the uncertainty associated with the phaseout of a powerful pro-growth policy and would provide a cost-effective boost to long-run economic output, wages, and employment in the United States.
2 min read
Full expensing, if made permanent, would be one of the most cost-effective ways to increase growth as it would produce about 4.5 times more GDP growth per dollar of revenue than making the law’s individual tax provisions permanent, according to our analysis.
3 min read
Full expensing is one of the most powerful pro-growth policies in terms of revenue forgone. Given that structures comprise a large share of the private capital stock, improving their tax treatment would end a large bias against investment in the tax code.
14 min readEven two years after enactment of the federal Tax Cuts and Jobs Act (TCJA), many states have yet to issue guidance explaining how they conform to key provisions of the law, particularly those pertaining to international income.
27 min read
Investments in worker training and education can increase productivity and economic output as growth in human capital accumulates, though the time horizon for these effects is longer than that of physical capital accumulation.
3 min read
Our new report outlines various policy recommendations for Kansas to consider in order to begin a robust and bipartisan conversation about modernizing the state’s tax code to suit a 21st century economy.
15 min read
Understanding the channel through which a tax policy change is expected to affect the economy is crucial. Absent this understanding, we are likely to reach the wrong conclusions on what sound tax policy looks like and what changes would improve the tax code.
4 min read
In our new report, we explore the design implications of a carbon tax and provide estimates for revenue, economic, and distributional effects of three potential carbon tax and revenue recycling proposals. Each proposal faces different trade-offs and achieves different policy goals.
23 min read
Canceling the amortization of research and development costs would reduce federal revenue, but policymakers have a variety of options to offset the costs.
3 min read
Additional evidence on the economic benefits of full expensing of investment was recently published in the American Economic Journal: Economic Policy.
4 min read
While tax rates matter to businesses, so too does the measure of income to which those tax rates apply. The corporate income tax is a tax on profits, normally defined as revenue minus costs. However, under the current tax code, businesses are unable to deduct the full cost of certain expenses—their capital investments—meaning the tax code is not neutral and actually increases the cost of investment.
3 min read
Capital cost recovery, though often overlooked, can have a significant impact on investment decisions—with far-reaching economic consequences.
24 min read