Reviewing How TCJA Impacted Mortgage Interest and State and Local Tax Deductions October 14, 2021 Two major provisions in the federal tax code have been limited since the Tax Cuts and Jobs Act (TCJA) of 2017: the state and local tax (SALT) deduction and the home mortgage interest deduction (MID).
Corporate Tax Revenue Hit an All-Time High in 2021 October 12, 2021 This year’s robust corporate tax collections calls into question efforts by the administration and congressional Democrats to increase the corporate tax rate and raise other corporate taxes based on claims of relatively low tax collections following the Tax Cuts and Jobs Act (TCJA) in 2017.
2017 Tax Changes Increase the Benefit of Uncapping SALT Deductions for High Income Taxpayers October 4, 2021 Our analysis illustrates how restoring the SALT deduction now would be more regressive than under prior law, strengthening the case for keeping the cap in place.
How Heavily Taxed Are U.S. Multinationals? September 29, 2021 In general, the effective tax rates on the foreign profits of U.S. multinationals are not that low relative to the U.S. tax rate, contrary to popular rhetoric.
Congressional Budget Office Shows 2017 Tax Law Reduced Tax Rates Across the Board in 2018 August 5, 2021 CBO data shows that the TCJA reduced federal tax rates for households across every income level while increasing the share of tax paid by the top 1 percent.
Corporate Tax Revenue Forecasted as Robust following the 2017 Tax Reform August 2, 2021 In light of these forecasts, which could be revised upwards further given the pace of growth in the economy and corporate profits, it seems clear that the 2017 tax reform did not substantially reduce the revenue potential of the corporate tax.
Business Tax Collections Within Historical Norm After Accounting for Pass-through Business Taxes November 18, 2021 When looking at the tax burden on businesses over time, it is important to provide a complete picture by accounting for the different types of businesses in the U.S. and the timing effects of the 2017 tax law. Doing so provides important context on existing tax burdens and for considering the impact of raising taxes on corporations and pass-through firms.
TCJA Is Not GILTI of Offshoring March 18, 2021 Many members of Congress have taken issue with the 2017 tax reform. However, the reasoning that has led some to believe that GILTI provides a path to offshoring investment and jobs is flawed.
No ‘Stealth Tax Hike’ in 2021, but Individual and Business Tax Increases Loom November 18, 2020 While there are many tax changes built into the tax code over the coming years for individuals and businesses, the recent claim that lower- and middle-income Americans may see a “stealth tax increase” in 2021 due to the Tax Cuts and Jobs Act (TCJA) is untrue.
Prospects for Federal Tax Policy After the 2020 Election November 10, 2020 President Biden and Congress should concentrate on areas of common ground, finding incremental places to improve the tax code. A bipartisan bill recently introduced to help retirement savings is a good model for what incremental reform may look like.
A Preliminary Look at 2019 Tax Data for Individuals October 29, 2020 The latest IRS data continues to illustrate that the net effect of the Tax Cuts and Jobs Act was to reduce effective tax rates across income groups. In 2019, the TCJA again expanded the use of several deductions and credits, made the standard deduction more favorable than itemizing, and lowered taxes for most taxpayers.
Role of the 2017 Tax Reform in the Nascent U.S. Economic Recovery October 15, 2020 While there is still plenty of work to be done to get unemployed Americans back to work, the U.S. economy as a whole is now recovering strongly from the pandemic-induced economic downturn, outperforming forecasts from earlier in the year and outperforming most other developed countries.
Reviewing the Commitment to American GROWTH Act October 14, 2020 House Republicans recently introduced HR 11, the Commitment to American GROWTH Act, outlining an alternative to Democratic presidential nominee Joe Biden’s tax vision. The proposal would address upcoming expirations of the 2017 Tax Cuts and Jobs Act (TCJA) and create or expand other tax provisions designed to boost domestic investment.
A Carbon Tax to Make the TCJA’s Individual Provisions Permanent September 30, 2020 Making the Tax Cuts and Jobs Act's individual provisions permanent combined with a carbon tax can be a revenue-neutral trade and increase the long-run size of the economy by 1 percent, making it a sustainable pro-growth option.
The White House Budget Highlights the Need to Extend Pro-Growth TCJA Business Tax Provisions February 12, 2020 Full expensing, if made permanent, would be one of the most cost-effective ways to increase growth as it would produce about 4.5 times more GDP growth per dollar of revenue than making the law's individual tax provisions permanent, according to our analysis.
Economic and Budgetary Impact of Extending Full Expensing to Structures January 7, 2020 Full expensing is one of the most powerful pro-growth policies in terms of revenue forgone. Given that structures comprise a large share of the private capital stock, improving their tax treatment would end a large bias against investment in the tax code.
Two Years After Passage, Treasury Regulations for the Tax Cuts and Jobs Act Surpass 1,000 Pages December 12, 2019 Treasury released final regulations on the base erosion and anti-abuse tax (BEAT), which is meant to dissuade firms from engaging in profit shifting abroad. Other high-profile releases from 2019 include final regulations guiding enforcement of Section 199A, commonly known as the pass-through deduction; final regulations on enforcing the new tax on global intangible low-tax income (GILTI); and final regulations on state-level workarounds to the $10,000 limit on the state and local tax deduction (SALT).
New Evidence on the Benefits of Full Expensing August 15, 2019 Additional evidence on the economic benefits of full expensing of investment was recently published in the American Economic Journal: Economic Policy.
Tax Expenditures Taken by Small Businesses in the Federal Tax Code August 5, 2019 The expenditures offered to small businesses are not created equal. We review the tax expenditures small businesses rely on most.
A Preliminary Look at 2018 Tax Data July 19, 2019 Initial 2018 IRS tax return data shows that the TCJA expanded the use of several credits and deductions, made the standard deduction more favorable than itemizing, reduced tax refunds, and lowered taxes for most Americans.
Testimony before the House Ways and Means Select Revenue Measures Subcommittee June 25, 2019 Watch Nicole Kaeding, Vice President of Federal and Special Projects at the Tax Foundation, testify before the House Ways and Means Select Revenue Measures Subcomittee on the impact of limiting the SALT deduction.
U.S. Businesses Pay or Remit 93 Percent of All Taxes Collected in America May 2, 2019 Setting aside the debate over whether a low tax bill is fair, what is missed in such stories is that American businesses are critical to the tax collection system at every level of government—federal, state, and local. Businesses either pay or remit more than 93 percent of all the taxes collected by governments in the U.S. Without businesses as their taxpayers and tax collectors, American governments would not have the resources to provide even the most basic services.
Taxable Income vs. Book Income: Why Some Corporations Pay No Income Tax May 2, 2019 Why do some companies appear to be profitable but pay little or no federal income taxes? It’s largely due to differences between book and taxable income.
The Lowered Corporate Income Tax Rate Makes the U.S. More Competitive Abroad May 2, 2019 One of the most significant provisions in the Tax Cuts and Jobs Act was the reduction of the U.S. corporate income tax rate from 35 percent to 21 percent. Over time, the lower corporate rate will encourage new investment and lead to additional economic growth. It will make the U.S. more attractive for companies by increasing after-tax returns on investments and will discourage companies from shifting profits to low-tax jurisdictions.
Anti-Base Erosion Provisions and Territorial Tax Systems in OECD Countries May 2, 2019 The U.S. decision to adopt a territorial tax system is certainly an improvement over having a worldwide system. However, in moving to a territorial system some of the new features created with the TCJA increased the complexity of the system.
What’s up with Being GILTI? March 14, 2019 The Tax Cuts and Jobs Act made significant changes to the way U.S. multinationals’ foreign profits are taxed. GILTI, or “Global Intangible Low Tax Income,” was introduced as an outbound anti-base erosion provision.
GILTI Minds: Why Some States Want to Tax International Income—And Why They Shouldn’t January 28, 2019 The new federal tax on Global Intangible Low-Taxed Income (GILTI) is something of a misnomer: it’s certainly global and it’s definitely income, but the rest of it is, at best, an approximation. It’s not exclusively levied on low-taxed income, nor just on the economic returns from intangible property. So what is GILTI, why might states tax it, and what’s the problem with that?
Toward a State of Conformity: State Tax Codes a Year After Federal Tax Reform January 28, 2019 States incorporate provisions of the federal tax code into their own codes in varying degrees, meaning that federal tax reform has implications for state revenue beyond any broader economic effects of tax reform.
Opportunity Zones: What We Know and What We Don’t January 8, 2019 Research suggests place-based incentive programs redistribute rather than generate new economic activity, subsidize investments that would have occurred anyway, and displace low-income residents.
Eliminating the SALT Deduction Cap Would Reduce Federal Revenue and Make the Tax Code Less Progressive January 4, 2019
The TCJA Improved the United States’ International Tax Competitiveness Index Rankings November 12, 2018
Nearly 90 Percent of Taxpayers Are Projected to Take the TCJA’s Expanded Standard Deduction September 26, 2018 The Tax Cuts and Jobs Act simplified tax filings via an expanded standard deduction, but currently, these individual tax changes are to expire after 2025.
Cost Recovery Treatment Short of Full Expensing Creates A Drag on Economic Growth September 17, 2018 Full expensing is a key driver of future economic growth, and can have a larger pro-growth effect per dollar of revenue forgone than cutting tax rates.
Who Benefits from Stock Buybacks? September 19, 2018 This interactive tool breaks down America's top 1,000 investment funds to show who benefits from stock buybacks triggered by the Tax Cuts and Jobs Act.
Testimony: The Positive Economic Growth Effects of the Tax Cuts and Jobs Act September 6, 2018 Tax Foundation President, Scott Hodge, provides written testimony before the United States Joint Economic Committee on the economic growth effects of TCJA.
Permanence for 100 Percent Bonus Depreciation Provides More Cost-Effective Growth than Permanence for Individual Provisions September 5, 2018 In the long run, permanent full expensing produces about 4.5 times more GDP growth per dollar of revenue than making individual TCJA provisions permanent.
The TCJA’s Expensing Provision Alleviates the Tax Code’s Bias Against Certain Investments September 5, 2018 The Tax Cuts and Jobs Act made significant progress in improving businesses’ ability to recover the cost of making investments in the United States by enacting 100 percent bonus depreciation.
Proposed Corporate Rate Hike Would Damage Economic Output August 23, 2018 Raising the corporate tax rate would reduce economic growth and lead to a smaller capital stock, lower wage growth, and reduced employment.
Reviewing Different Methods of Calculating Tax Compliance Costs August 21, 2018 Tax compliance creates real costs, which can be calculated. Each method provides unique illustrations of the cost of complying with U.S. tax code.
State Tax Implications of Federal Tax Reform in Virginia August 14, 2018 Virginia has an opportunity to improve its tax competitiveness following the Tax Cuts and Jobs Act. Inaction will result in higher taxes.
The Benefits of Cutting the Corporate Income Tax Rate August 14, 2018 The Tax Cuts and Jobs Act reduced the corporate income tax rate from the highest statutory rate in the developed world to a more globally competitive 21 percent.
The Tax Cuts and Jobs Act Simplified the Tax Filing Process for Millions of Households August 7, 2018 The newly expanded standard deduction will reduce the time taxpayers spend working on Form 1040 by 4 to 7 percent, translating into $3.1 to $5.4 billion saved annually.
The Jobs Impact of the Tax Cuts and Jobs Act by State, 2018-2027 July 30, 2018 The Tax Cuts and Jobs Act (TCJA) is projected to add 215,000 full-time equivalent jobs in 2018 alone, and 1,443,000 cumulative full-time equivalent jobs by 2025. Our new interactive maps shows how many new jobs each state can expect to see each year over the next decade.
Five States Accomplish Meaningful Tax Reform in the Wake of the Tax Cuts and Jobs Act July 23, 2018 Georgia, Idaho, Iowa, Missouri, and Utah capitalized upon the Tax Cuts and Jobs Act's (TCJA) changes by conforming to increase their annual state revenues.
The Economics of 1986 Tax Reform, and Why It Didn’t Create Growth July 17, 2018 In contrast, the Tax Cuts and Jobs Act lowered the corporate tax rate and allows immediate and full expensing for the next five years.
Making the Tax Cuts and Jobs Act Individual Income Tax Provisions Permanent July 10, 2018 If extended, the individual income tax provisions in the Tax Cuts and Jobs Act would increase long-run GDP by 2.2 percent, long-run wages by 0.9 percent, and add 1.5 million new jobs.
The Distributional Impact of the Tax Cuts and Jobs Act over the Next Decade June 28, 2018 Taxpayers in every income level will receive a tax cut in 2018 and for most of the next decade. See how the size of that tax cut will vary for each income group over the next decade with our new, long-term distributional analysis.
Reforming the Pass-Through Deduction June 21, 2018 Here's how the new pass-through deduction works and how it can be reformed to be less complex, less prone to abuse, more neutral, and more economically efficient.
The OECD Highlights the Economic Growth Benefits of Full Expensing June 12, 2018 The Organisation for Economic Co-operation and Development (OECD) praised a measure in the Tax Cuts and Jobs Act (TCJA) passed last December.
New Letter Says the “Retail Glitch” is Discouraging Business Investment June 11, 2018 Retail groups sent a letter to Congress explaining that the “retail glitch" in the Tax Cuts and Jobs Act would discourage business investment.
The Impact of the Tax Cuts and Jobs Act by Congressional District June 13, 2018 How will the Tax Cuts and Jobs Act impact taxpayers in your congressional district? This interactive map compares average 2018 tax cuts across the country.
The Fixtures Fix: Correcting the Drafting Error Involving the Expensing of Qualified Improvement Property May 30, 2018 Due to a legislative oversight, the Tax Cuts and Jobs Act excluded the category of qualified improvement property investment from 100 percent bonus depreciation.
Capital Cost Recovery across the OECD, 2018 May 24, 2018 One hundred percent expensing for short-life business investments was a great start but needs to be enacted on a permanent basis for it to have an impact on long-term decision-making.
Indiana Passes Conformity Bill in One-Day Special Session May 22, 2018 Indiana recently passed tax conformity legislation linking the state's individual and corporate tax code to the new federal law.
States Can’t Just Hit Pause on Implications of Federal Tax Reform May 10, 2018 The new federal tax law left states with some important decisions to make. If they delay, their residents could face confusion come filing time.
What’s in the Iowa Tax Reform Package May 9, 2018 Iowa Gov. Kim Reynolds is on the verge of signing tax reform legislation that would greatly improve the state's needlessly complex tax code.
Minnesota’s Tax Plans Make Modest Improvements May 2, 2018 In response to the new federal tax law, the governor and lawmakers in both houses have proposed plans for updating Minnesota's tax code.
A Hybrid Approach: The Treatment of Foreign Profits under the Tax Cuts and Jobs Act May 3, 2018 The Tax Cuts and Jobs Act moved the U.S. toward more of a territorial corporate tax system used by most other OECD countries. However, the U.S. law contains key differences in the treatment of foreign profits.
Business Investment Increases by 39 Percent in Q1 2018 April 27, 2018 Several S&P 500 companies reported an increase in capital expenditures, a possible sign that the Tax Cuts and Jobs Act will help encourage new investment.
Lawmakers May Vote on Making Key Provisions of the TCJA Permanent April 5, 2018 The Tax Cuts and Jobs Act improved the US tax code, but key provisions are only temporary. Now Congress may vote to ensure those tax breaks are permanent.
Inversions under the New Tax Law March 13, 2018 The Tax Cuts and Jobs Act was meant to boost growth and deter corporate inversions. What does it mean that an Ohio company is still moving its HQ to the UK?
Tax Reform Isn’t Done March 8, 2018 Expiring provisions, scheduled tax increases on investment, unresolved issues in the code—The Tax Cuts and Jobs Act was passed, but tax reform isn't done yet.
Maine Tax Conformity Bill a Step Toward Better Policy March 7, 2018 In the wake of the Tax Cuts and Jobs Act, Maine is considering conformity legislation that would improve the competitiveness of the state's tax code.
Tax Reform Moving Quickly in Georgia February 23, 2018 In response to federal tax reform, Georgia is poised to reform its own tax code in a way that would make the state more competitive with its neighbors.
State Tax Conformity: Revenue Effects January 31, 2018 Federal tax reform will have a significant effect on state budgets. This resource, updated often, helps you keep track of the revenue impact in each state.
Tax Compliance Burden Could Cost America as much as 1.2 Percent of its GDP February 21, 2018 The time and effort associated with tax compliance is a drag on the economy, as researchers have shown. Will the Tax Cuts and Jobs Act reduce that burden?
The United States’ Corporate Income Tax Rate is Now More in Line with Those Levied by Other Major Nations February 12, 2018 The Tax Cuts and Jobs Act significantly reduced the federal statutory corporate income tax rate. When combined with state and local taxes, it put the U.S.’s corporate tax rate in line with the average among OECD nations.
The ‘Grain Glitch’ Needs to Be Fixed February 8, 2018 The Tax Cuts and Jobs Act tax preference for farm co-ops would distort agricultural activity and create tax planning opportunities for wealthy taxpayers.
The U.S.’s New Ranking on the International Tax Competitiveness Index February 5, 2018 The TCJA is projected to improve the United States’ current ranking from 30th among the 35 Organisation for Economic Co-operation and Development (OECD) countries to 25th, an improvement of five places.
Tax Plan Calculator February 8, 2018 Our tax calculator allows you to compare how the Tax Cuts and Jobs Act and proposals to modify the federal tax code could impact overall tax burdens, take-home pay, credits, deductions, and more.
Trade and Capital Flow Consequences of Tax Reform: A Means to a Faster Expansion of U.S. Capital Formation and Employment December 21, 2017 The tax bill will boost investment and incomes in the United States, and make the country a better place to locate production and hiring. There will be a transitory rise in the trade deficit, but in the context of a stronger, faster-growing economy.
Does Your State’s Corporate Income Tax Code Conform with the Federal Tax Code? December 20, 2017 Whether your state's corporate income tax code conforms to the federal corporate income tax code matters a great deal for how the Tax Cuts and Jobs Act will impact revenue in your state.
Pass-Through Deduction Won’t Flow Through to Most States December 19, 2017 For policymakers in most states, the fact that the pass-through deduction doesn’t affect AGI should come as a relief. For those in the six states which use federal taxable income as their starting point for conformity, decoupling from the provision is an entirely viable option.
Who Gets a Tax Cut Under the Tax Cuts and Jobs Act? December 19, 2017 How would the Tax Cuts and Jobs Act impact different households? Check out our sample taxpayers to see what would change if the bill is enacted.
Preliminary Details and Analysis of the Tax Cuts and Jobs Act December 18, 2017 According to the Tax Foundation’s Taxes and Growth Model, the Tax Cuts and Jobs Act would lead to a 1.7 percent increase in GDP over the long term, 1.5 percent higher wages, an additional 339,000 full-time equivalent jobs, and cost $1.47 trillion on a static basis and by $448 billion on a dynamic basis.
Reviewing How TCJA Impacted Mortgage Interest and State and Local Tax Deductions October 14, 2021 Two major provisions in the federal tax code have been limited since the Tax Cuts and Jobs Act (TCJA) of 2017: the state and local tax (SALT) deduction and the home mortgage interest deduction (MID).
2017 Tax Changes Increase the Benefit of Uncapping SALT Deductions for High Income Taxpayers October 4, 2021 Our analysis illustrates how restoring the SALT deduction now would be more regressive than under prior law, strengthening the case for keeping the cap in place.
Congressional Budget Office Shows 2017 Tax Law Reduced Tax Rates Across the Board in 2018 August 5, 2021 CBO data shows that the TCJA reduced federal tax rates for households across every income level while increasing the share of tax paid by the top 1 percent.
No ‘Stealth Tax Hike’ in 2021, but Individual and Business Tax Increases Loom November 18, 2020 While there are many tax changes built into the tax code over the coming years for individuals and businesses, the recent claim that lower- and middle-income Americans may see a “stealth tax increase” in 2021 due to the Tax Cuts and Jobs Act (TCJA) is untrue.
Prospects for Federal Tax Policy After the 2020 Election November 10, 2020 President Biden and Congress should concentrate on areas of common ground, finding incremental places to improve the tax code. A bipartisan bill recently introduced to help retirement savings is a good model for what incremental reform may look like.
A Preliminary Look at 2019 Tax Data for Individuals October 29, 2020 The latest IRS data continues to illustrate that the net effect of the Tax Cuts and Jobs Act was to reduce effective tax rates across income groups. In 2019, the TCJA again expanded the use of several deductions and credits, made the standard deduction more favorable than itemizing, and lowered taxes for most taxpayers.
Role of the 2017 Tax Reform in the Nascent U.S. Economic Recovery October 15, 2020 While there is still plenty of work to be done to get unemployed Americans back to work, the U.S. economy as a whole is now recovering strongly from the pandemic-induced economic downturn, outperforming forecasts from earlier in the year and outperforming most other developed countries.
A Carbon Tax to Make the TCJA’s Individual Provisions Permanent September 30, 2020 Making the Tax Cuts and Jobs Act's individual provisions permanent combined with a carbon tax can be a revenue-neutral trade and increase the long-run size of the economy by 1 percent, making it a sustainable pro-growth option.
Two Years After Passage, Treasury Regulations for the Tax Cuts and Jobs Act Surpass 1,000 Pages December 12, 2019 Treasury released final regulations on the base erosion and anti-abuse tax (BEAT), which is meant to dissuade firms from engaging in profit shifting abroad. Other high-profile releases from 2019 include final regulations guiding enforcement of Section 199A, commonly known as the pass-through deduction; final regulations on enforcing the new tax on global intangible low-tax income (GILTI); and final regulations on state-level workarounds to the $10,000 limit on the state and local tax deduction (SALT).
A Preliminary Look at 2018 Tax Data July 19, 2019 Initial 2018 IRS tax return data shows that the TCJA expanded the use of several credits and deductions, made the standard deduction more favorable than itemizing, reduced tax refunds, and lowered taxes for most Americans.
Testimony before the House Ways and Means Select Revenue Measures Subcommittee June 25, 2019 Watch Nicole Kaeding, Vice President of Federal and Special Projects at the Tax Foundation, testify before the House Ways and Means Select Revenue Measures Subcomittee on the impact of limiting the SALT deduction.
Eliminating the SALT Deduction Cap Would Reduce Federal Revenue and Make the Tax Code Less Progressive January 4, 2019
Nearly 90 Percent of Taxpayers Are Projected to Take the TCJA’s Expanded Standard Deduction September 26, 2018 The Tax Cuts and Jobs Act simplified tax filings via an expanded standard deduction, but currently, these individual tax changes are to expire after 2025.
Reviewing Different Methods of Calculating Tax Compliance Costs August 21, 2018 Tax compliance creates real costs, which can be calculated. Each method provides unique illustrations of the cost of complying with U.S. tax code.
The Tax Cuts and Jobs Act Simplified the Tax Filing Process for Millions of Households August 7, 2018 The newly expanded standard deduction will reduce the time taxpayers spend working on Form 1040 by 4 to 7 percent, translating into $3.1 to $5.4 billion saved annually.
Making the Tax Cuts and Jobs Act Individual Income Tax Provisions Permanent July 10, 2018 If extended, the individual income tax provisions in the Tax Cuts and Jobs Act would increase long-run GDP by 2.2 percent, long-run wages by 0.9 percent, and add 1.5 million new jobs.
The Distributional Impact of the Tax Cuts and Jobs Act over the Next Decade June 28, 2018 Taxpayers in every income level will receive a tax cut in 2018 and for most of the next decade. See how the size of that tax cut will vary for each income group over the next decade with our new, long-term distributional analysis.
The Impact of the Tax Cuts and Jobs Act by Congressional District June 13, 2018 How will the Tax Cuts and Jobs Act impact taxpayers in your congressional district? This interactive map compares average 2018 tax cuts across the country.
Tax Reform Isn’t Done March 8, 2018 Expiring provisions, scheduled tax increases on investment, unresolved issues in the code—The Tax Cuts and Jobs Act was passed, but tax reform isn't done yet.
Tax Compliance Burden Could Cost America as much as 1.2 Percent of its GDP February 21, 2018 The time and effort associated with tax compliance is a drag on the economy, as researchers have shown. Will the Tax Cuts and Jobs Act reduce that burden?
Tax Plan Calculator February 8, 2018 Our tax calculator allows you to compare how the Tax Cuts and Jobs Act and proposals to modify the federal tax code could impact overall tax burdens, take-home pay, credits, deductions, and more.
Who Gets a Tax Cut Under the Tax Cuts and Jobs Act? December 19, 2017 How would the Tax Cuts and Jobs Act impact different households? Check out our sample taxpayers to see what would change if the bill is enacted.
Preliminary Details and Analysis of the Tax Cuts and Jobs Act December 18, 2017 According to the Tax Foundation’s Taxes and Growth Model, the Tax Cuts and Jobs Act would lead to a 1.7 percent increase in GDP over the long term, 1.5 percent higher wages, an additional 339,000 full-time equivalent jobs, and cost $1.47 trillion on a static basis and by $448 billion on a dynamic basis.
Corporate Tax Revenue Hit an All-Time High in 2021 October 12, 2021 This year’s robust corporate tax collections calls into question efforts by the administration and congressional Democrats to increase the corporate tax rate and raise other corporate taxes based on claims of relatively low tax collections following the Tax Cuts and Jobs Act (TCJA) in 2017.
How Heavily Taxed Are U.S. Multinationals? September 29, 2021 In general, the effective tax rates on the foreign profits of U.S. multinationals are not that low relative to the U.S. tax rate, contrary to popular rhetoric.
Corporate Tax Revenue Forecasted as Robust following the 2017 Tax Reform August 2, 2021 In light of these forecasts, which could be revised upwards further given the pace of growth in the economy and corporate profits, it seems clear that the 2017 tax reform did not substantially reduce the revenue potential of the corporate tax.
Business Tax Collections Within Historical Norm After Accounting for Pass-through Business Taxes November 18, 2021 When looking at the tax burden on businesses over time, it is important to provide a complete picture by accounting for the different types of businesses in the U.S. and the timing effects of the 2017 tax law. Doing so provides important context on existing tax burdens and for considering the impact of raising taxes on corporations and pass-through firms.
TCJA Is Not GILTI of Offshoring March 18, 2021 Many members of Congress have taken issue with the 2017 tax reform. However, the reasoning that has led some to believe that GILTI provides a path to offshoring investment and jobs is flawed.
No ‘Stealth Tax Hike’ in 2021, but Individual and Business Tax Increases Loom November 18, 2020 While there are many tax changes built into the tax code over the coming years for individuals and businesses, the recent claim that lower- and middle-income Americans may see a “stealth tax increase” in 2021 due to the Tax Cuts and Jobs Act (TCJA) is untrue.
Prospects for Federal Tax Policy After the 2020 Election November 10, 2020 President Biden and Congress should concentrate on areas of common ground, finding incremental places to improve the tax code. A bipartisan bill recently introduced to help retirement savings is a good model for what incremental reform may look like.
Role of the 2017 Tax Reform in the Nascent U.S. Economic Recovery October 15, 2020 While there is still plenty of work to be done to get unemployed Americans back to work, the U.S. economy as a whole is now recovering strongly from the pandemic-induced economic downturn, outperforming forecasts from earlier in the year and outperforming most other developed countries.
Reviewing the Commitment to American GROWTH Act October 14, 2020 House Republicans recently introduced HR 11, the Commitment to American GROWTH Act, outlining an alternative to Democratic presidential nominee Joe Biden’s tax vision. The proposal would address upcoming expirations of the 2017 Tax Cuts and Jobs Act (TCJA) and create or expand other tax provisions designed to boost domestic investment.
The White House Budget Highlights the Need to Extend Pro-Growth TCJA Business Tax Provisions February 12, 2020 Full expensing, if made permanent, would be one of the most cost-effective ways to increase growth as it would produce about 4.5 times more GDP growth per dollar of revenue than making the law's individual tax provisions permanent, according to our analysis.
Economic and Budgetary Impact of Extending Full Expensing to Structures January 7, 2020 Full expensing is one of the most powerful pro-growth policies in terms of revenue forgone. Given that structures comprise a large share of the private capital stock, improving their tax treatment would end a large bias against investment in the tax code.
Two Years After Passage, Treasury Regulations for the Tax Cuts and Jobs Act Surpass 1,000 Pages December 12, 2019 Treasury released final regulations on the base erosion and anti-abuse tax (BEAT), which is meant to dissuade firms from engaging in profit shifting abroad. Other high-profile releases from 2019 include final regulations guiding enforcement of Section 199A, commonly known as the pass-through deduction; final regulations on enforcing the new tax on global intangible low-tax income (GILTI); and final regulations on state-level workarounds to the $10,000 limit on the state and local tax deduction (SALT).
Tax Expenditures Taken by Small Businesses in the Federal Tax Code August 5, 2019 The expenditures offered to small businesses are not created equal. We review the tax expenditures small businesses rely on most.
U.S. Businesses Pay or Remit 93 Percent of All Taxes Collected in America May 2, 2019 Setting aside the debate over whether a low tax bill is fair, what is missed in such stories is that American businesses are critical to the tax collection system at every level of government—federal, state, and local. Businesses either pay or remit more than 93 percent of all the taxes collected by governments in the U.S. Without businesses as their taxpayers and tax collectors, American governments would not have the resources to provide even the most basic services.
Taxable Income vs. Book Income: Why Some Corporations Pay No Income Tax May 2, 2019 Why do some companies appear to be profitable but pay little or no federal income taxes? It’s largely due to differences between book and taxable income.
The Lowered Corporate Income Tax Rate Makes the U.S. More Competitive Abroad May 2, 2019 One of the most significant provisions in the Tax Cuts and Jobs Act was the reduction of the U.S. corporate income tax rate from 35 percent to 21 percent. Over time, the lower corporate rate will encourage new investment and lead to additional economic growth. It will make the U.S. more attractive for companies by increasing after-tax returns on investments and will discourage companies from shifting profits to low-tax jurisdictions.
Anti-Base Erosion Provisions and Territorial Tax Systems in OECD Countries May 2, 2019 The U.S. decision to adopt a territorial tax system is certainly an improvement over having a worldwide system. However, in moving to a territorial system some of the new features created with the TCJA increased the complexity of the system.
What’s up with Being GILTI? March 14, 2019 The Tax Cuts and Jobs Act made significant changes to the way U.S. multinationals’ foreign profits are taxed. GILTI, or “Global Intangible Low Tax Income,” was introduced as an outbound anti-base erosion provision.
GILTI Minds: Why Some States Want to Tax International Income—And Why They Shouldn’t January 28, 2019 The new federal tax on Global Intangible Low-Taxed Income (GILTI) is something of a misnomer: it’s certainly global and it’s definitely income, but the rest of it is, at best, an approximation. It’s not exclusively levied on low-taxed income, nor just on the economic returns from intangible property. So what is GILTI, why might states tax it, and what’s the problem with that?
Opportunity Zones: What We Know and What We Don’t January 8, 2019 Research suggests place-based incentive programs redistribute rather than generate new economic activity, subsidize investments that would have occurred anyway, and displace low-income residents.
The TCJA Improved the United States’ International Tax Competitiveness Index Rankings November 12, 2018
Permanence for 100 Percent Bonus Depreciation Provides More Cost-Effective Growth than Permanence for Individual Provisions September 5, 2018 In the long run, permanent full expensing produces about 4.5 times more GDP growth per dollar of revenue than making individual TCJA provisions permanent.
The TCJA’s Expensing Provision Alleviates the Tax Code’s Bias Against Certain Investments September 5, 2018 The Tax Cuts and Jobs Act made significant progress in improving businesses’ ability to recover the cost of making investments in the United States by enacting 100 percent bonus depreciation.
Proposed Corporate Rate Hike Would Damage Economic Output August 23, 2018 Raising the corporate tax rate would reduce economic growth and lead to a smaller capital stock, lower wage growth, and reduced employment.
The Benefits of Cutting the Corporate Income Tax Rate August 14, 2018 The Tax Cuts and Jobs Act reduced the corporate income tax rate from the highest statutory rate in the developed world to a more globally competitive 21 percent.
The Economics of 1986 Tax Reform, and Why It Didn’t Create Growth July 17, 2018 In contrast, the Tax Cuts and Jobs Act lowered the corporate tax rate and allows immediate and full expensing for the next five years.
Reforming the Pass-Through Deduction June 21, 2018 Here's how the new pass-through deduction works and how it can be reformed to be less complex, less prone to abuse, more neutral, and more economically efficient.
The OECD Highlights the Economic Growth Benefits of Full Expensing June 12, 2018 The Organisation for Economic Co-operation and Development (OECD) praised a measure in the Tax Cuts and Jobs Act (TCJA) passed last December.
New Letter Says the “Retail Glitch” is Discouraging Business Investment June 11, 2018 Retail groups sent a letter to Congress explaining that the “retail glitch" in the Tax Cuts and Jobs Act would discourage business investment.
The Fixtures Fix: Correcting the Drafting Error Involving the Expensing of Qualified Improvement Property May 30, 2018 Due to a legislative oversight, the Tax Cuts and Jobs Act excluded the category of qualified improvement property investment from 100 percent bonus depreciation.
A Hybrid Approach: The Treatment of Foreign Profits under the Tax Cuts and Jobs Act May 3, 2018 The Tax Cuts and Jobs Act moved the U.S. toward more of a territorial corporate tax system used by most other OECD countries. However, the U.S. law contains key differences in the treatment of foreign profits.
Business Investment Increases by 39 Percent in Q1 2018 April 27, 2018 Several S&P 500 companies reported an increase in capital expenditures, a possible sign that the Tax Cuts and Jobs Act will help encourage new investment.
Inversions under the New Tax Law March 13, 2018 The Tax Cuts and Jobs Act was meant to boost growth and deter corporate inversions. What does it mean that an Ohio company is still moving its HQ to the UK?
Tax Reform Isn’t Done March 8, 2018 Expiring provisions, scheduled tax increases on investment, unresolved issues in the code—The Tax Cuts and Jobs Act was passed, but tax reform isn't done yet.
The United States’ Corporate Income Tax Rate is Now More in Line with Those Levied by Other Major Nations February 12, 2018 The Tax Cuts and Jobs Act significantly reduced the federal statutory corporate income tax rate. When combined with state and local taxes, it put the U.S.’s corporate tax rate in line with the average among OECD nations.
The ‘Grain Glitch’ Needs to Be Fixed February 8, 2018 The Tax Cuts and Jobs Act tax preference for farm co-ops would distort agricultural activity and create tax planning opportunities for wealthy taxpayers.
The U.S.’s New Ranking on the International Tax Competitiveness Index February 5, 2018 The TCJA is projected to improve the United States’ current ranking from 30th among the 35 Organisation for Economic Co-operation and Development (OECD) countries to 25th, an improvement of five places.
Trade and Capital Flow Consequences of Tax Reform: A Means to a Faster Expansion of U.S. Capital Formation and Employment December 21, 2017 The tax bill will boost investment and incomes in the United States, and make the country a better place to locate production and hiring. There will be a transitory rise in the trade deficit, but in the context of a stronger, faster-growing economy.
Does Your State’s Corporate Income Tax Code Conform with the Federal Tax Code? December 20, 2017 Whether your state's corporate income tax code conforms to the federal corporate income tax code matters a great deal for how the Tax Cuts and Jobs Act will impact revenue in your state.
Pass-Through Deduction Won’t Flow Through to Most States December 19, 2017 For policymakers in most states, the fact that the pass-through deduction doesn’t affect AGI should come as a relief. For those in the six states which use federal taxable income as their starting point for conformity, decoupling from the provision is an entirely viable option.
Preliminary Details and Analysis of the Tax Cuts and Jobs Act December 18, 2017 According to the Tax Foundation’s Taxes and Growth Model, the Tax Cuts and Jobs Act would lead to a 1.7 percent increase in GDP over the long term, 1.5 percent higher wages, an additional 339,000 full-time equivalent jobs, and cost $1.47 trillion on a static basis and by $448 billion on a dynamic basis.
Role of the 2017 Tax Reform in the Nascent U.S. Economic Recovery October 15, 2020 While there is still plenty of work to be done to get unemployed Americans back to work, the U.S. economy as a whole is now recovering strongly from the pandemic-induced economic downturn, outperforming forecasts from earlier in the year and outperforming most other developed countries.
Reviewing the Commitment to American GROWTH Act October 14, 2020 House Republicans recently introduced HR 11, the Commitment to American GROWTH Act, outlining an alternative to Democratic presidential nominee Joe Biden’s tax vision. The proposal would address upcoming expirations of the 2017 Tax Cuts and Jobs Act (TCJA) and create or expand other tax provisions designed to boost domestic investment.
The White House Budget Highlights the Need to Extend Pro-Growth TCJA Business Tax Provisions February 12, 2020 Full expensing, if made permanent, would be one of the most cost-effective ways to increase growth as it would produce about 4.5 times more GDP growth per dollar of revenue than making the law's individual tax provisions permanent, according to our analysis.
Economic and Budgetary Impact of Extending Full Expensing to Structures January 7, 2020 Full expensing is one of the most powerful pro-growth policies in terms of revenue forgone. Given that structures comprise a large share of the private capital stock, improving their tax treatment would end a large bias against investment in the tax code.
New Evidence on the Benefits of Full Expensing August 15, 2019 Additional evidence on the economic benefits of full expensing of investment was recently published in the American Economic Journal: Economic Policy.
Taxable Income vs. Book Income: Why Some Corporations Pay No Income Tax May 2, 2019 Why do some companies appear to be profitable but pay little or no federal income taxes? It’s largely due to differences between book and taxable income.
The TCJA Improved the United States’ International Tax Competitiveness Index Rankings November 12, 2018
Cost Recovery Treatment Short of Full Expensing Creates A Drag on Economic Growth September 17, 2018 Full expensing is a key driver of future economic growth, and can have a larger pro-growth effect per dollar of revenue forgone than cutting tax rates.
Testimony: The Positive Economic Growth Effects of the Tax Cuts and Jobs Act September 6, 2018 Tax Foundation President, Scott Hodge, provides written testimony before the United States Joint Economic Committee on the economic growth effects of TCJA.
Permanence for 100 Percent Bonus Depreciation Provides More Cost-Effective Growth than Permanence for Individual Provisions September 5, 2018 In the long run, permanent full expensing produces about 4.5 times more GDP growth per dollar of revenue than making individual TCJA provisions permanent.
The TCJA’s Expensing Provision Alleviates the Tax Code’s Bias Against Certain Investments September 5, 2018 The Tax Cuts and Jobs Act made significant progress in improving businesses’ ability to recover the cost of making investments in the United States by enacting 100 percent bonus depreciation.
The OECD Highlights the Economic Growth Benefits of Full Expensing June 12, 2018 The Organisation for Economic Co-operation and Development (OECD) praised a measure in the Tax Cuts and Jobs Act (TCJA) passed last December.
The Fixtures Fix: Correcting the Drafting Error Involving the Expensing of Qualified Improvement Property May 30, 2018 Due to a legislative oversight, the Tax Cuts and Jobs Act excluded the category of qualified improvement property investment from 100 percent bonus depreciation.
Capital Cost Recovery across the OECD, 2018 May 24, 2018 One hundred percent expensing for short-life business investments was a great start but needs to be enacted on a permanent basis for it to have an impact on long-term decision-making.
Lawmakers May Vote on Making Key Provisions of the TCJA Permanent April 5, 2018 The Tax Cuts and Jobs Act improved the US tax code, but key provisions are only temporary. Now Congress may vote to ensure those tax breaks are permanent.
GILTI Minds: Why Some States Want to Tax International Income—And Why They Shouldn’t January 28, 2019 The new federal tax on Global Intangible Low-Taxed Income (GILTI) is something of a misnomer: it’s certainly global and it’s definitely income, but the rest of it is, at best, an approximation. It’s not exclusively levied on low-taxed income, nor just on the economic returns from intangible property. So what is GILTI, why might states tax it, and what’s the problem with that?
Toward a State of Conformity: State Tax Codes a Year After Federal Tax Reform January 28, 2019 States incorporate provisions of the federal tax code into their own codes in varying degrees, meaning that federal tax reform has implications for state revenue beyond any broader economic effects of tax reform.
State Tax Implications of Federal Tax Reform in Virginia August 14, 2018 Virginia has an opportunity to improve its tax competitiveness following the Tax Cuts and Jobs Act. Inaction will result in higher taxes.
The Jobs Impact of the Tax Cuts and Jobs Act by State, 2018-2027 July 30, 2018 The Tax Cuts and Jobs Act (TCJA) is projected to add 215,000 full-time equivalent jobs in 2018 alone, and 1,443,000 cumulative full-time equivalent jobs by 2025. Our new interactive maps shows how many new jobs each state can expect to see each year over the next decade.
Five States Accomplish Meaningful Tax Reform in the Wake of the Tax Cuts and Jobs Act July 23, 2018 Georgia, Idaho, Iowa, Missouri, and Utah capitalized upon the Tax Cuts and Jobs Act's (TCJA) changes by conforming to increase their annual state revenues.
The Impact of the Tax Cuts and Jobs Act by Congressional District June 13, 2018 How will the Tax Cuts and Jobs Act impact taxpayers in your congressional district? This interactive map compares average 2018 tax cuts across the country.
Indiana Passes Conformity Bill in One-Day Special Session May 22, 2018 Indiana recently passed tax conformity legislation linking the state's individual and corporate tax code to the new federal law.
States Can’t Just Hit Pause on Implications of Federal Tax Reform May 10, 2018 The new federal tax law left states with some important decisions to make. If they delay, their residents could face confusion come filing time.
What’s in the Iowa Tax Reform Package May 9, 2018 Iowa Gov. Kim Reynolds is on the verge of signing tax reform legislation that would greatly improve the state's needlessly complex tax code.
Minnesota’s Tax Plans Make Modest Improvements May 2, 2018 In response to the new federal tax law, the governor and lawmakers in both houses have proposed plans for updating Minnesota's tax code.
Maine Tax Conformity Bill a Step Toward Better Policy March 7, 2018 In the wake of the Tax Cuts and Jobs Act, Maine is considering conformity legislation that would improve the competitiveness of the state's tax code.
Tax Reform Moving Quickly in Georgia February 23, 2018 In response to federal tax reform, Georgia is poised to reform its own tax code in a way that would make the state more competitive with its neighbors.
State Tax Conformity: Revenue Effects January 31, 2018 Federal tax reform will have a significant effect on state budgets. This resource, updated often, helps you keep track of the revenue impact in each state.
Who Benefits from Stock Buybacks? September 19, 2018 This interactive tool breaks down America's top 1,000 investment funds to show who benefits from stock buybacks triggered by the Tax Cuts and Jobs Act.
The Jobs Impact of the Tax Cuts and Jobs Act by State, 2018-2027 July 30, 2018 The Tax Cuts and Jobs Act (TCJA) is projected to add 215,000 full-time equivalent jobs in 2018 alone, and 1,443,000 cumulative full-time equivalent jobs by 2025. Our new interactive maps shows how many new jobs each state can expect to see each year over the next decade.
The Impact of the Tax Cuts and Jobs Act by Congressional District June 13, 2018 How will the Tax Cuts and Jobs Act impact taxpayers in your congressional district? This interactive map compares average 2018 tax cuts across the country.
Tax Plan Calculator February 8, 2018 Our tax calculator allows you to compare how the Tax Cuts and Jobs Act and proposals to modify the federal tax code could impact overall tax burdens, take-home pay, credits, deductions, and more.
