The Tax Foundation’s Center for Federal Tax Policy takes a quantitative approach to analyzing the economic, budgetary, and distributional impact of important campaign, legislative, and other popular tax proposals using our dynamic Taxes and Growth (TAG) macroeconomic model.
The mission of our economic and tax modeling program is to educate lawmakers and the public about the key trade-offs in tax policy, the real-world impact of those trade-offs on taxpayers and our economy, and the best options for achieving principled and pro-growth tax reform.
In an attempt to provide a realistic, data-driven analysis of federal tax policy, the Tax Foundation has developed a General Equilibrium Model to simulate the effects of tax policies on the economy and on government revenues and budgets.
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This tax reform plan would boost long-run GDP by 2.5%, grow wages by 1.4%, and add 1.3M jobs, all while collecting a similar amount of tax revenue as the current code and reducing the long-run debt burden.
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Policymakers should have two priorities in the upcoming economic policy debates: a larger economy and fiscal responsibility. Principled, pro-growth tax policy can help accomplish both.
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We estimate Trump’s proposed tariffs and partial retaliation from all trading partners would together offset more than two-thirds of the long-run economic benefit of his proposed tax cuts.
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A robust collection of 70 potential US tax reform changes and US tax reform options for reforming the tax code. See the comprehensive tax reform guide.
Lawmakers should use the most comprehensive analytical tools available to them—like dynamic scoring—to make informed decisions about policy changes.
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The analysis provides key insights into how their models work and the sort of outputs we can expect from their models as part of next year’s tax debate.
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If lawmakers are serious about pro-growth policies and fiscal responsibility, they will need to put policies forward that achieve those goals. Simply adjusting the baseline doesn’t reduce actual deficits in the coming years.
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Fiscal pressures are likely to weigh heavily on lawmakers as they craft a tax reform package. That increased pressure could result in well-designed tax reform that prioritizes economic growth, simplicity, and stability, or it could encourage budget gimmicks and economically harmful offsets. Lawmakers should avoid the latter.
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President-elect Trump may want to impose tariffs to encourage investment and work, but his strategy will backfire. Tariffs will certainly create benefits for protected industries, but those benefits come at the expense of consumers and other industries throughout the economy.
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Lawmakers will need to pursue fiscal responsibility as they address the tax law expirations, but fiscal responsibility requires finding sound ways to pay for spending priorities. Tariffs don’t make the cut.
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On behalf of the entire Tax Foundation family, we want to thank Gary Robbins for his five decades of bucking the conventional wisdom and saying, “why not?”
4 min read
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.
17 min read
We estimate Trump’s proposed tariffs and partial retaliation from all trading partners would together offset more than two-thirds of the long-run economic benefit of his proposed tax cuts.
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Using tariff policy to reallocate investment and jobs is a costly mistake—that’s a history lesson we should not forget.
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Estimating the economic effects of different types of taxes informs policymakers about the trade-offs of raising revenue in a given way.
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A new analysis finds that the tax increase would reduce average wages by as much as $597 per US worker each year. In some states, the drop in wages would exceed $700 per worker.
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The gap between statutory rates and average effective tax rates for personal income tax in the European Union varies significantly, affecting the efficiency and simplicity of the tax system.
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Exempting overtime would unnecessarily complicate the tax code, increase compliance and administrative costs, and reduce neutrality by favoring certain work arrangements over others.
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Allowing full deductibility of residential structures would mean more housing construction, particularly multifamily housing—a practical solution to address housing affordability challenges.
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Depending on the 2024 US election, the current corporate tax rate of 21 percent could be in for a change. See the modeling here.
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Exempting Social Security benefits from income tax would increase the budget deficit by about $1.6 trillion over 10 years, accelerate the insolvency of the Social Security and Medicare trust funds, and create a new hole in the income tax without a sound policy rationale.
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A 15 percent corporate rate would be pro-growth, but it would not address the structural issues with today’s corporate tax base.
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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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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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The Trump administration imposed nearly $80 billion worth of new taxes on Americans by levying tariffs on thousands of products in 2018 and 2019, amounting to one of the largest tax increases in decades. The Biden administration has kept most of the Trump administration tariffs in place
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