States are flush with cash, but taxpayers’ purchasing power is being eroded by high inflation. Tax rebates, gas tax holidays, and other temporary tax expedients have the potential to add to existing inflation—but good intentions do not always make for good policy.
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Households across the country are struggling with the effects of high inflation. Lawmakers in New Jersey are looking to combat an unlegislated tax increase by indexing the state’s individual income tax code for inflation, something all states should consider.
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In a time of increased mobility and tax competition, a lower rate and simpler tax structure would help Georgia stand out among states. Lawmakers would be wise to consider reforming the state’s income tax to improve the state’s competitiveness.
3 min read
If policymakers are looking to change the tax code to help fight inflation, they should pump the brakes on the federal gas tax holiday and instead consider structural reforms to raise the economy’s productive capacity in the long term.
4 min read
By reducing the tax code’s current barriers to investment and saving and simplifying its complex rules, lawmakers would greatly enhance the ability of Americans to pursue new ideas, create more opportunities, and build financial security for themselves and their families.
40 min read
Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections:
28 min read
Before declaring victory, it is imperative to get the details right. The latest proposal is a drastic improvement over the last one, but there is still more work to be done if the Magnolia State is to sustain the intended transformation.
7 min read
Consumer prices rose by 7 percent in 2021, the highest annual rate of inflation since 1982. Where did this inflation come from and what might its impacts be? Tax and fiscal policy offer important clues.
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The IRS recently released the new inflation adjusted 2022 tax brackets and rates. Explore updated credits, deductions, and exemptions, including the standard deduction & personal exemption, Alternative Minimum Tax (AMT), Earned Income Tax Credit (EITC), Child Tax Credit (CTC), capital gains brackets, qualified business income deduction (199A), and the annual exclusion for gifts.
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Inflation is often called a hidden tax, but in many states it yields a far more literal tax increase as tax brackets fail to adjust for changes in consumer purchasing power.
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In an effort to raise roughly $100 billion, the House proposal would double cigarette taxes and increase all other tobacco and nicotine taxes to comparable rates—a strategy with severe unintended consequences.
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While parts of the U.S. tax code can handle inflation, full expensing of capital investment would be a major improvement along these lines.
5 min read
Individual income taxes are a major source of state government revenue, accounting for 37 percent of state tax collections in fiscal year (FY) 2017. Several states had notable individual income tax changes in 2020: Arizona, Arkansas, Massachusetts, Michigan, Minnesota, North Carolina, Ohio, Tennessee, Virginia, and Wisconsin.
22 min read
A neutral cost recovery system lowers the short-term cost of the policy to the federal government while providing nearly equivalent economic benefits. While neutral cost recovery is not a new idea, there are several policy questions lawmakers will want to consider when designing this system.
6 min read
Individual income taxes are a major source of state government revenue, accounting for 37 percent of state tax collections in fiscal year (FY) 2017. Several states had notable individual income tax changes in 2020: Arizona, Arkansas, Massachusetts, Michigan, Minnesota, North Carolina, Ohio, Tennessee, Virginia, and Wisconsin.
9 min read