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COVID-19 (coronavirus) Pandemic Tax Policies

As the U.S. federal, state, and local governments, as well as countries around the world, continue to implement measures to support their economies amid the coronavirus (COVID-19) pandemic, our experts are providing trusted analysis of the latest coronavirus tax developments to better inform policymakers, journalists, and taxpayers.

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Federal deductibility SBA Paycheck Protection Program (PPP) in the CARES Act. Small Business Administration Paycheck Protection Program (PPP) in the CARES Act

HEROES Act Temporarily Increases Dependent Credit Generosity

The HEROES Act would make notable expansions to all three dependent-related credits, increasing maximum credit amounts, refundability, and income eligibility phaseouts. Practically, this means that certain filers could expect to receive a larger refund for each additional hour of work, eligible dependent, and dependent care expenses if the bill became law.

5 min read
Neutral Cost Recovery, Jack Kemp, Bob Kasten

Neutral Cost Recovery Is Not a New Idea

As stated by Rep. Jack Kemp in 1985, “Neutral cost recovery is designed to provide the present value of investment expensing without some of its practical problems.”

5 min read
Capital cost recovery and capital allowances in the OECD 2023 , full expensing, full immediate expensing

Empirical Evidence Shows Expensing Leads to More Investment and Higher Employment

The Tax Foundation’s General Equilibrium Model suggests that allowing businesses to immediately deduct or “expense” their capital investments in the year in which they are purchased delivers the biggest bang for the buck in spurring economic growth and jobs compared to other tax policies.

7 min read

Louisiana Considers Temporary Suspension of Part of Corporation Franchise Tax

State recovery plans should lessen the burden on businesses by shifting from capital stock taxes and other taxes that are charged regardless of profitability. Louisiana does well to target its Corporation Franchise Tax, a burdensome tax that would target businesses that may already be struggling.

2 min read
Understanding the Tax Treatment of Inventory: The Role of LIFO

Options for Improving the Tax Treatment of Structures

Improving the tax treatment of structures is one of the most cost-effective tax policy changes available to lawmakers as they consider how to remove investment barriers in the tax code to hasten the economic recovery. Policymakers must weigh the trade-offs among long-run economic output goals, revenue constraints, and the existing stock of structures.

13 min read
Who Shoulders the Burden of Federal Income Taxes? high-income earners, high-income taxpayers, progressive tax system, federal income tax, income inequality, wealth tax

Under the HEROES Act, State Budgets Could Soar as the Economy Suffers

The HEROES Act, proposed by House Democrats as a next round of fiscal relief during the coronavirus outbreak, contains about $1.08 trillion in aid to states and localities. That would bring the pandemic total to $1.63 trillion—an amount so large that it might overwhelm their ability to spend it and could reward fiscal irresponsibility.

8 min read
State and local relief package, state and local government relief package amid coronavirus, business and government aid, coronavirus relief package, state revenue deficit, state budget deficit

Designing a State and Local Government Relief Package

The COVID-19 pandemic and accompanying economic downturn will wreak havoc on state and local tax revenues, with projections of a 15-20 percent decline in state revenues. Our new report provides a framework for how to design an effective state and local relief package.

35 min read

Watch: Coronavirus: A Path to Economic Recovery

What challenges should we expect to face as the U.S. economy begins to re-open? When is the right time for legislators to start focusing on long-term recovery vs. short-term needs? What policies should federal legislators pursue to clear a path to recovery?

1 min read
White House considers capital gains tax cut, neutral cost recovery, full expensing amid coronavirus economic relief options, coronavirus business relief

White House Considers Neutral Cost Recovery for Structures

When considering long-term policies for increasing long-run levels of investment and economic growth, full expensing and neutral cost recovery are better targeted than policies like a capital gains cut.

6 min read
Business tangible personal property tax, business inventory tax, Alaska business tangible personal property tax, Texas business tangible personal property tax, Oklahoma business tangible personal property tax, Arkansas business tangible personal property tax, Louisiana business tangible personal property tax, Mississippi business tangible personal property tax, Georgia business tangible personal property tax, Kentucky business tangible personal property tax, West Virginia business tangible personal property tax, Virginia business tangible personal property tax, Maryland business tangible personal property tax, Michigan business tangible personal property tax, Massachusetts business tangible personal property tax, Vermont business tangible personal property tax

Does Your State Tax Business Inventory?

Inventory taxes are levied regardless of whether a business makes a profit, adding to the burden of businesses already struggling to stay afloat.

2 min read
State franchise tax, state franchise taxes, state capital stock tax, state capital stock taxes, Wyoming capital stock tax, Nebraska capital stock tax, Oklahoma capital stock tax, Arkansas capital stock tax, Louisiana capital stock tax, Mississippi capital stock tax, Tennessee capital stock tax, Alabama capital stock tax, Georgia capital stock tax, South Carolina capital stock tax, North Carolina capital stock tax, Illinois capital stock tax, New York capital stock tax, Delaware capital stock tax, Connecticut capital stock tax, Massachusetts capital stock tax

Does Your State Levy a Capital Stock Tax?

As many businesses may need time to return to profitability after this crisis, states should prioritize reducing reliance on capital stock taxes, and shift toward more neutral forms of business taxation.

4 min read