In a perilous economic and fiscal environment, with instability created by Trump’s trade war and publicly held debt on track to surpass the highest levels ever recorded within five years, a lot rides on how Republicans navigate tax and spending reforms in reconciliation.
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President Trump’s 25 percent tariffs on Canada and Mexico is estimated to reduce long-run GDP by 0.2 percent, reduce hours worked by 223,000 full-time equivalent jobs, and reduce after-tax incomes by an average of 0.6 percent—before accounting for foreign retaliation.
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The agreement represents a major change for tax competition, and many countries will be rethinking their tax policies for multinationals. If there is no agreement on changes to Pillar Two or digital services taxes, retaliatory American tariffs could be on the horizon.
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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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Given the poor state of the budget process and worsening debt trajectory, lawmakers should move boldly and quickly to address the issue, including via a fiscal commission process. Issues to consider should include reforms to both spending and taxes.
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How do current federal corporate tax rates and brackets compare historically?
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Investment matters across the economy, and policymaking should reflect that.
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Trump’s tariff hikes would rank as the the largest tax increase outside of wartime since 1940. Meanwhile, Harris’s tax plan would rank as the 6th largest tax increase outside of wartime since 1940.
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How does tax policy shape a nation’s competitiveness? Today, we’re diving into the showdown between the US and China, exploring how China’s enticing tax incentives pose a formidable challenge to America’s economic supremacy.
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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Restoring expensing for R&D, machinery, and equipment; extending better cost recovery to structures investment; and avoiding raising the corporate tax rate would create a stronger, pro-investment policy environment for the US economy.
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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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Short FormWorld War II shaped many aspects of the modern world, including the US tax code. But the dramatic changes to our system that military mobilization required didn’t subside when the fighting finished; they’ve persisted to today.
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When the government imposes a tariff, it may be trading jobs and production in one part of the economy for jobs in another part of the economy by increasing production costs for downstream industries.
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While both President Biden and Vice President Harris aim their proposed tax hikes on businesses and high earners, key differences between their tax ideas in the past reveal where Harris may take her tax policy platform in the 2024 campaign.
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From President Biden calling the Tax Cuts and Jobs Act the “largest tax cut in American history,” to former President Trump claiming that Biden “wants to raise your taxes by four times,” the campaign rhetoric on taxes may be sparking some confusion.
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A higher tax burden for private infrastructure investments like wireless spectrum, 5G technology, and machinery and equipment makes an existing problem worse—especially against the backdrop of outright state subsidies in countries like China.
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The Treasury Department recently touted strong business investment in the years following the pandemic-driven recession and pointed to the Biden administration’s industrial policies in the Inflation Reduction Act and CHIPS Act as key drivers.
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As members of Congress prepare to address the expiration of the TCJA, they should appreciate how revenues have evolved since 2017.
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Both candidates should provide clear and honest answers about their plans (or lack thereof) to address the nation’s urgent tax policy issues.
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