Taxes, Fiscal Policy, and Inflation
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.
Featured Articles
Efforts to Combat Inflation’s Impact on the Tax Code Should Remain a Priority in 2023
While hoping for inflation’s continued decline, policymakers should finish the job and index the tax code to prepare for future bouts of high inflation and as a contingency in case it takes longer to defeat elevated inflation than expected.
As Inflation Rises, So Will Tax Bills in Many States
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.
All Related Articles
How the Inflation Reduction Act and Pillar Two Could Shape the Future of EU Competitiveness
French President Macron is coming to Washington, D.C., this week to ask President Biden the question on the minds of European leaders: “Why did you do this to us?”
States Should Make Full Expensing Permanent to Help Curb Inflation
In times of high inflation, states should consider adopting permanent full expensing because it boosts long-run productivity, economic output, and wages.
Prospects for Federal Tax and Budget Policy after the 2022 Midterms
Two weeks after the 2022 midterm elections, it’s becoming clearer where tax policy may be headed for the rest of the year and into 2023. In the short term, Congress must deal with tax extenders and expiring business tax provisions that may undermine the economy.
Shaky Economic and Fiscal Outlook Requires Stable and Pro-Growth Tax Extenders Policy
Policymakers face a difficult balancing act this year in what is likely to be an unusual tax extenders season.
Difficult Trade-Offs Make Policy Consensus on Child Tax Credit Elusive
As we near this year’s “lame duck” session of Congress, there has been renewed interest in reforming the child tax credit as part of a tax deal. Our new analysis highlights the trade-offs that policymakers will face
Changing Tax Policy Landscape Will Worsen U.S. Competitiveness
Unless lawmakers act, 2022 will be the first of several years that the U.S. tax system automatically changes for the worse.
California Can’t Give Up Tax Increases
California is no stranger to high taxes, and the state has enough going for it that its economy can withstand higher tax burdens than would be viable in other parts of the country. But there’s always a tipping point.
Tax Treatment of Social Security Benefits Remains a Confusing Matter for Taxpayers
The Social Security Administration (SSA) announced the cost-of-living adjustment for Social Security payments based on inflation over the previous year. This has brought renewed attention to how the tax code treats Social Security benefits, which can be a confusing subject for taxpayers.
Inflation Is Surging, So Are Federal Tax Collections
Federal tax collections are approaching the highest levels in U.S. history set during World War II and again during the dot-com bubble in 2000. Meanwhile, federal spending in FY 2022 was over 25 percent of GDP—a level only exceeded during the height of the pandemic in 2020 and 2021, and during World War II.
The “Inflation Tax” Is Regressive
A new CBO report reveals that lower- and middle-income households are disproportionately shouldering the burden of this current inflation wave. And historical analysis suggests there is much more to come.