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.
What will the future of tax policy look like? In this episode, we dive into the critical challenges and opportunities looming on the horizon, especially with major tax cuts set to expire, which could increase taxes for 62 percent of filers.
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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Forty-four states levy a corporate income tax, with top rates ranging from a 2.25 percent flat rate in North Carolina to a 11.5 percent top marginal rate in New Jersey.
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Facing a projected $3 billion budget deficit in fiscal year 2026, with forecasts of a growing gap over the next five years, Governor Wes Moore (D) has included about $1 billion in proposed tax increases in his budget proposal.
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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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Some European countries have raised their statutory corporate rates over the past year, including Czechia, Estonia, Iceland, Lithuania, and Slovenia.
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Americans were on the move in 2024, and many chose low-tax states over high-tax ones.
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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.
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The European Union’s experience with high inflation highlights the critical need for adaptive fiscal policies. Best practices drawn from the academic literature recommend implementing automatic adjustment mechanisms with a certain periodicity and based on price increases.
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Varying local trade tax rates impact business investment and local government revenue across Germany’s municipalities.
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In his FY 2025 budget, Illinois Gov. Pritzker outlined a number of proposed tax changes, including to individual and corporate income taxes, state sales taxes, and sports betting excise taxes.
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As more and more states move away from throwback or throwout rules, those states that still impose these rules are becoming less attractive for businesses, which are incentivized to relocate their sales activities to non-throwback states.
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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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At least 32 notable tax policy changes recently took effect across 18 states, including alterations to income taxes, payroll taxes, sales and use taxes, property taxes, and excise taxes. See if your state tax code changed.
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It’s unlikely these implemented and proposed windfall taxes will achieve their goals of raising additional revenues without distorting the market. Instead, they would penalize domestic production and punitively target certain industries without a sound tax base.
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In most European OECD countries, corporate income is taxed twice, once at the entity level and once at the shareholder level.
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Permanent full expensing is an efficient and neutral tax policy that will allow markets to allocate private investment effectively while moving the economy towards the climate goals of the EU.
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Individual income tax rates can influence location decision-making, especially in an era of enhanced mobility, where it is easier for individuals to move without jeopardizing their current job, or without limiting the scope of their search for a new one.
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To recover from the pandemic and put the global economy on a trajectory for growth, policymakers need to aim for more generous and permanent capital allowances. This will spur real investment and can also contribute to more environmentally friendly production across the globe.
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While throwback and throwout rules in states’ corporate tax codes may not be widely understood, they have a notable impact on business location and investment decisions and reduce economic efficiency.
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