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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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 federal tax code remains a major source of frustration and controversy for Americans, and a hindrance to economic growth and opportunity. Other countries, such as Estonia, have proven that sufficient tax revenue can be collected in a less frustrating and more efficient way.
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The business tax changes originally introduced in the TCJA are scheduled to increase tax burdens on businesses at a time when economic headwinds and broader uncertainty are higher than they have been in decades.
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According to our analysis, President Biden’s budget would reduce long-run economic output by about 1.3 percent and eliminate 335,000 FTE jobs. See what tax policies the president is proposing.
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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.
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.
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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.
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This study demonstrates how Tax Foundation’s TAG model calculates the weighted average METRs for different capital assets in the corporate and noncorporate sectors. The high marginal rates of up to 53 percent in the corporate sector illustrate why there is an urgent need for business tax reform.
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See the state-by-state impact of the Senate Tax Cuts and Jobs Act for both new jobs and the boost to after-tax incomes for middle-income families.
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This comprehensive overview of the of the Senate Tax Cuts and Jobs Act includes a summary of its details and macroeconomic analysis of how it would impact federal revenue, wages, GDP, and after-tax incomes.
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The Tax Foundation is grateful for all constructive feedback on its estimates, and will continue to strive to estimate the economic, revenue, and distributional effects of tax changes with the greatest accuracy possible.
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This paper evaluates the arguments for and against “crowding out” and compares these arguments to empirical studies. It discusses the impact of tax changes on the allocation of national income between consumption and saving, and the allocation of saving between private investment and government deficits. It finds that the crowding out argument is largely based on a mistaken assumption about the flexibility and availability of saving and credit for the financing of government deficits and private investment.
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This comprehensive overview of the of the House Tax Cuts and Jobs Act includes a summary of its details and macroeconomic analysis of how it would impact federal revenue, wages, GDP, and after-tax incomes.
21 min readCorporate tax reform done right is key to growing the economy, boosting real family incomes, and making the U.S. a better place in which to do business.
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Recent empirical evidence shows that workers bear upwards of 70 percent of the corporate income tax burden, much more than popular tax models claim, which make errors in how they account for super-normal returns and the openness of our economy.
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Instead of making expensing temporary, lawmakers could pursue other ways to speed up cost recovery with permanent economic gains and without drastically reducing revenue. One way to do that is by enacting “depreciation indexing.”
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These four Tax Foundation tax plans demonstrate ways in which lawmakers could achieve permanent, pro-growth tax reform while keeping the level of federal revenue and the distribution of the tax burden roughly the same as current law.
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Real tax reform should boost incomes for all. A corporate income tax cut could be a means to do that, but not if it’s temporary. A temporary cut is less likely to promote growth and less likely to benefit American workers.
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If economic growth is the goal of your tax reform plan, moving towards full expensing and a cash-flow tax is the most efficient way to spur investment,
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