Academic studies show that higher corporate tax rates depress worker wages and lead to fewer jobs. An Organisation for Co-operation and Development (OECD) study has found that the corporate tax is the least efficient and most harmful way for governments to raise revenue.
Expensing for capital investment is not a special tax break. Expensing aligns the timing of tax deductions with the timing of actual capital expenditures so that the tax code does not discourage marginal investment projects.
7 min read
There is a real danger that the well-founded admiration of expensing can slip into the belief that rates will not matter if the business tax base is correctly designed. Avi-Yonah’s article is a recent and well-articulated version of this intellectual undercurrent.
7 min read
A Destination-Based Cash Flow Tax (DBCFT) reduces the tax code’s penalty on investment, narrows its bias toward debt over equity, and removes much of the incentive to shift profits abroad.
7 min read
As energy prices have declined, European countries have switched the focus of their windfall profits taxes—a one-time tax levied on a company or industry when economic conditions result in large, unexpected profits—from energy providers to the banking and financial sector.
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Economists and journalists have been pointing to a labor share of income series from the Bureau of Labor Statistics (BLS) as evidence that capital is taking an ever-increasing slice of the economic pie. But a closer look at the national income accounts shows a different story.
7 min read
Ten years ago, then-Speaker Paul Ryan and Ways and Means Chairman Kevin Brady released the “Better Way” Tax Plan, the blueprint that would eventually become the Tax Cuts and Jobs Act of 2017—the largest overhaul of the US tax code in over 30 years.
If America’s leaders today want to learn how to build a lasting system on the foundation of simplicity and neutrality, they should follow the Siim Kallas blueprint.
4 min read
The Belgian proposal departs significantly from sound tax policy principles and risks generating substantial economic distortions, legal uncertainty, and trade frictions while raising relatively little revenue.
Federal government debt is over $32 trillion, around the size of the nation’s annual economic output (its gross domestic product, or GDP). Debt levels this high mean US borrowing costs are sensitive to interest rate changes that may otherwise seem small.
5 min read
Poland has one of the most restrictive approaches to the tax treatment of losses in the OECD. Loss carryover provisions allow businesses to deduct their losses in one year against taxable income in another, smoothing their taxable income over time. Their absence or restriction leads to firms with more variable profits and losses over time being taxed at higher rates, penalizing risky investment, such as research and development (R&D), and business expansion.
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The Maryland Tax Court has struck down the state’s digital advertising tax and ordered that refunds be paid to taxpayers for five and a half years’ worth of collections under the unconstitutional tax.
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In June, the Dominican Republic rushed through a package of tax legislation in seven days. International examples demonstrate that consultation, transparency, and clarity are key factors for successful tax reform.
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US policymakers have put forward two new tax proposals to address concerns about how artificial intelligence (AI) will impact land, energy, and the workforce.
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Some taxes have more powerful economic effects than others, and that’s a lesson policymakers should absorb as they work to craft a tax code that encourages growth and raises sustainable revenue.
8 min read
The Tax Foundation uses and maintains a General Equilibrium Model, known as our Taxes and Growth (TAG) Model to simulate the effects of government tax and spending policies on the economy and on government revenues and budgets.
9 min read
The ongoing economic uncertainty from global geopolitical threats, supply chain disruptions, rising interest rates, and lagging economic growth in many developed countries have highlighted the importance of private business investment.
32 min read
Although sometimes overlooked in discussions about corporate taxation, capital allowances play an important role in a country’s corporate tax base and can impact investment decisions—with far-reaching economic consequences.
6 min read
The European Commission’s new Tax Omnibus proposal marks a notable step towards improving the simplicity and competitiveness of the EU Single Market.
8 min read
Pennsylvania lawmakers are looking to impose the Commonwealth’s existing telecom gross receipts tax (GRT) on companies providing digital advertising services in Pennsylvania.
5 min read
Digital services taxes address a real concern—the need to adapt taxation to the digital economy—but they are not the right solution. They raise limited revenue, are often passed on to consumers rather than large digital firms, create economic distortions, increase complexity and compliance costs, negatively impact innovation and competitiveness, and risk international retaliation.