If Illinois’ budget is enacted as-is, Illinois will newly tax 50 percent of Global Intangible Low-Taxed Income (GILTI) as of tax year 2025, retroactively increasing tax burdens for US businesses and further hindering Illinois’ business tax competitiveness.
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Our preliminary analysis finds the tax provisions increase long-run GDP by 0.8 percent and reduce federal tax revenue by $4.0 trillion from 2025 through 2034 on a conventional basis before added interest costs.
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Tax legislation in 2025 may have good reason to address international corporate income taxes, because of scheduled changes slated to go into effect or because of international developments like the Pillar Two agreement.
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The Tax Foundation uses and maintains a General Equilibrium Model, known as our Taxes and Growth (TAG) Model to simulate the effects of government tax and spending policies on the economy and on government revenues and budgets.
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The Tax Foundation models tax policy using our proprietary Taxes and Growth model, illustrating the economic, revenue, and distributional impacts of different changes to the federal tax code. We’ve recently implemented improvements to the model that have been underway for the past several years, and we will be detailing them further in our forthcoming model methodology update.
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This week, the incoming Trump administration issued a day-one executive order on the global minimum tax agreement known as Pillar Two, which seeks to ensure multinational corporations pay at least 15 percent in income tax.
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On tax policy, Harris carries forward much of President Biden’s FY 2025 budget, including higher taxes aimed at businesses and high earners. She would also further expand the child tax credit (CTC) and various other tax credits and incentives while exempting tips from income tax.
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States that tax GILTI increase filing complexity, drive up the cost of tax compliance, and introduce unnecessary economic uncertainty and legal risk. 21 states and DC continue to tax GILTI despite these challenges.
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Supernormal profits are an important concept, but we should be wary of analysis that both defines supernormal profits very broadly and equates all supernormal profits with monopoly profits that can be easily taxed without negative economic effects.
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Lawmakers should consider compliance costs—not just tax liabilities—when evaluating reforms to business income taxation.
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Gov. Walz’s tax policy record is notable because of how much it contrasts with broader national trends. In recent years, most governors have championed tax cuts. Walz, rare among his peers, chose tax increases.
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Puerto Rico, a US territory with a limited ability to set its own tax policies, will be the first part of the US to be substantially affected by Pillar Two, the global tax agreement that seeks to establish a 15 percent minimum tax rate on corporate income.
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The Moore case could have important impacts on tax policy.
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The global landscape of international corporate taxation is undergoing significant transformations as jurisdictions grapple with the difficulty of defining and apportioning corporate income for the purposes of tax.
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Lawmakers should aim for policies that support investment and hiring in the United States and refining anti-avoidance measures to improve administrability and lower compliance costs.
With proposals to adopt the nation’s highest corporate income tax, second-highest individual income tax, and most aggressive treatment of foreign earnings, as well as to implement an unusually high tax on property transfers, Vermont lawmakers have no shortage of options for raising taxes dramatically.
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Historical evidence and recent studies have shown that retaliatory tax and trade proposals raise prices and reduce the quantity of goods and services available to U.S. businesses and consumers, resulting in lower incomes, reduced employment, and lower economic output.
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The Tax Cuts and Jobs Act of 2017 (TCJA) reformed the U.S. system for taxing international corporate income. Understanding the impact of TCJA’s international provisions thus far can help lawmakers consider how to approach international tax policy in the coming years.
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Lawmakers will have to weigh the economic, revenue, and distributional trade-offs of extending or making permanent the various provisions of the TCJA as they decide how to approach the upcoming expirations. A commitment to growth, opportunity, and fiscal responsibility should guide the approach.
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The 2017 Tax Cuts and Jobs Act (TCJA) was the largest corporate tax reform in a generation, lowering the corporate tax rate from 35 percent to 21 percent, temporarily allowing full expensing for short-lived assets (referred to as bonus depreciation), and overhauling the international tax code.
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