The existing tax code is biased against capital-intensive manufacturers, as it prevents companies from deducting capital costs the same way they deduct labor costs.
Fixing the bias against capital investment is preferable to pursuing industrial policy through the tax code, as subsidies tend to be ineffective and tariffs often weaken protected domestic industries and harm downstream industries.
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Policymakers actively marginalized the manufacturing sector by saddling them with cost recovery rules that prevent them from deducting the full cost of investment in physical plant and equipment. Going forward, policymakers should avoid haphazard fixes, targeted measures, and protectionism.
50 min read
Contrary to the president’s promises, the tariffs will cause short-term pain and long-term pain, no matter the ways people and businesses change their behavior.
5 min read
Broad, pro-investment tax policy matters for growth, and the US has plenty of opportunities to make improvements, particularly given the advantages our cross-Pacific rival confers on its firms.
5 min read
The Trump tariffs amount to an average tax increase per US household of $1,200 in 2025 and $1,600 in 2026.
45 min read
The US Supreme Court heard oral arguments on November 5 to determine whether the president’s emergency powers under the International Emergency Economic Powers Act (IEEPA) include the power to impose tariffs.
5 min read
Expensing for manufacturing structures is a significant step forward for the tax treatment of structures, but it could be improved in several ways.
7 min read
The industry breakdown of the OBBBA corporate tax cuts shows firms in industries involved with tangible production, such as manufacturing, are the biggest winners, as measured by changes in tax liability.
3 min read
While the One Big Beautiful Bill Act tries to buoy manufacturing, President Trump’s tariffs are an anvil dragging the sector down.
The administration has a strong desire to boost manufacturing investment and there are many provisions in the new tax bill that support this aim. But the administration’s erratic trade policy is driving up the costs of key inputs that manufacturers rely on to build things in the US.
We estimate the One Big Beautiful Bill Act would increase long-run GDP by 1.2 percent and reduce federal tax revenue by $5 trillion over the next decade on a conventional basis.
11 min read
The ongoing economic uncertainty from Russia’s war in Ukraine, economic recovery, supply chain disruptions, and rising interest rates have highlighted the importance of business investment.
30 min read
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.
9 min read
Catastrophic rhetoric about US manufacturing is not justified. The tariffs are extremely counterproductive. Still, all is not well in the US manufacturing sector. What should we do?
7 min read
With the imposition of American tariffs on steel and aluminum imports on March 12th, the European Union was officially pulled into the global trade war.
Contrary to the president’s promises, the tariffs will cause short-term pain and long-term pain, no matter the ways people and businesses change their behavior.
5 min read
The Trump administration appears to be moving in a “reciprocal” policy direction despite the significant negative economic consequences for American consumers of across-the-board tariffs on goods coming into the US. However, the EU’s VAT system should not be used as a justification for retaliatory tariffs.
6 min read
While tariffs are often presented as tools to enhance US competitiveness, a long history of evidence and recent experience shows they lead to increased costs for consumers and unprotected producers and harmful retaliation, which outweighs the benefits afforded to protected industries.
Investment matters across the economy, and policymaking should reflect that.
4 min read
Broad, pro-investment tax policy matters for growth, and the US has plenty of opportunities to make improvements, particularly given the advantages our cross-Pacific rival confers on its firms.
5 min read
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.
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.
44 min read
Both candidates’ policies would ultimately stifle the kinds of broad economic expansion they claim to seek.
With a changing economy—the law is about companies selling tangible products, but our economy is increasingly service-oriented—and state-level tests to the ongoing validity of the law, perhaps the time has come for Congress to update and expand upon these protections, which are designed to limit states from imposing substantial tax remittance and compliance burdens on businesses with only the most minimal of contacts with the state.
5 min read