New IRS data shows the US federal income tax system continues to be progressive as high-income taxpayers pay the highest average income tax rates. Average tax rates for all income groups remain lower after the Tax Cuts and Jobs Act (TCJA).
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As lawmakers prepare for the debate over the expiration of the 2017 Tax Cuts and Jobs Act (TCJA), they may face increasing pressure to offset the cost of lowering tax rates by changing other parts of the tax code. One potential option to raise additional revenue to cover the cost of the TCJA’s reforms—like lower rates, a larger standard deduction, and a larger child tax credit—would be to repeal the head of household filing status.
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Short FormToday marks 55 years since two students sent the first message across the Advanced Research Projects Agency Network (ARPANET) between computers at four universities, which would later become the internet we enjoy today.
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Trump’s proposal would bring the US more in line with most other developed economies, which tax only those who live and work within their borders.
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In her campaign for president, VP Kamala Harris has embraced all the tax increases President Biden proposed in the White House FY 2025 budget—including a new idea that would require taxpayers with net wealth above $100 million to pay a minimum tax on their unrealized capital gains from assets such as stocks, bonds, or privately held companies.
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Not every change in the Tax Cuts and Jobs Act simplified the tax code. However, the TCJA reduced compliance costs overall for individual filers, and allowing fundamental structural improvements to expire would make the tax code worse.
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Americans will spend more than 7.9 billion hours complying with IRS tax filing and reporting requirements in 2024. This is equal to 3.8 million full-time workers doing nothing but tax return paperwork—roughly equal to the population of Los Angeles.
7 min read
Reviewing reported income helps to understand the composition of the federal government’s revenue base and how Americans earn their taxable income. The individual income tax, the federal government’s largest source of revenue, is largely a tax on labor.
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President Biden is proposing extraordinarily large tax hikes on businesses and the top 1 percent of earners that would put the US in a distinctly uncompetitive international position and threaten the health of the US economy.
19 min read
To make sound financial decisions and support better tax policy, taxpayers should understand the taxes they face. Unfortunately, most U.S. taxpayers do not know or are unsure of basic tax concepts.
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Despite taxes playing a significant role in personal finances and being levied on a sizable portion of the U.S. population, most Americans are not just unhappy with the current tax code but also do not understand it.
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The 2021 tax year was the fourth since the Tax Cuts and Jobs Act (TCJA) made many significant, but temporary, changes to the individual income tax code to lower tax rates, widen brackets, increase the standard deduction and child tax credit, and more.
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Short FormDon’t be fooled by tax myths and misconceptions this tax filing season.
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The CBO projects deficits will be higher than historical levels, largely due to growth in mandatory spending programs While some recent legislation has reduced the deficit, the Inflation Reduction Act is proving to be more expensive than originally promised.
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At first glance, a ruling for the plaintiffs in Moore might seem to solve some of the timing problems with the U.S. tax system. Unfortunately, upon greater inspection, such a ruling might create new timing problems. And the more rigid the ruling, the harder it would be to fix the timing problems it would create.
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The latest tax gap report from the IRS has generated much media attention—and much misunderstanding.
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Income taxes impose steeper economic costs, and often steeper administrative and compliance costs, than consumption taxes. Moving to a consumption tax would end the tax bias against saving and investment and provide an opportunity to greatly simplify anti-poverty programs embedded in the tax code.
45 min read
Can an organization rightfully be called a “nonprofit” if it almost always makes money? And what if most of that organization’s income comes from “business income,” should it legitimately be considered a “charity”?
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A major case pending before the U.S. Supreme Court (Moore v. United States) is calling into question provisions on large portions of the U.S. tax base which could quickly become legally uncertain, putting significant revenue at stake.
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One year after its enactment, there are concerns about the Inflation Reduction Acts overall fiscal impact, the additional complexity it introduces to the tax system, and the sustainability of its initiatives.