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.
The phaseout of 100 percent bonus depreciation, scheduled to take place after the end of 2022, will increase the after-tax cost of investment in the U.S. Permanently extending it would increase long-run economic output by 0.4 percent and increase employment by 73,000 FTE jobs.
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In dollar terms, the industries that would account for the largest book minimum tax liabilities are manufacturing, at $73.2 billion, followed by finance, insurance, and management at $46.9 billion.
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How will the Inflation Reduction Act taxes impact inflation, economic growth, tax revenue, and everyday taxpayers? See Inflation Reduction Act tax changes.
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While exempting accelerated depreciation from the book minimum tax would reduce some of the economic harm of the tax, there remain many unresolved problems within the design and structure of the tax that make it a poorly chosen revenue option.
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Research has shown that spikes in tax rates can act as barriers to upward mobility. High marginal tax rates might directly influence the decisions workers make about accepting a raise, working additional hours, or whether they might remain on government benefits.
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Our new analysis reviews the basic structure of carbon taxes, how they compare to the existing set of climate policies, and how they could fit into various pro-growth tax reform packages.
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Research almost invariably shows a negative relationship between income tax rates and gross domestic product (GDP). Cuts to marginal tax rates are highly correlated with decreases in the unemployment rate.
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Policymakers actively marginalized the manufacturing sector by saddling them with cost recovery rules that prevent them from deducting the full cost of investment in physical plant and equipment. Going forward, policymakers should avoid haphazard fixes, targeted measures, and protectionism.
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By reducing the tax code’s current barriers to investment and saving and simplifying its complex rules, lawmakers would greatly enhance the ability of Americans to pursue new ideas, create more opportunities, and build financial security for themselves and their families.
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Policymakers and taxpayers should understand the scope of tax changes necessary to fully pay for the large-scale social spending programs that would be initiated under the Build Back Better Act.
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Learn more about the House Build Back Better Act, including the latest details and analysis of the Biden tax increases and reconciliation bill tax proposals.
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Due to the House Build Back Better tax plan’s economically costly and inefficient tax increases, our analysis finds that long-run GDP would drop by a little over $1 for every $1 in new tax revenue.
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Tax Foundation testimony at the Joint Economic Committee hearing on the revenue provisions in the Build Back Better Act and related analysis on their estimated impact.
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If the spending in the $3.5 trillion budget resolution were financed entirely from tax increases, it would rival as a share of GDP the tax increases used to finance World War II and the Korean War.
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The Biden administration’s international tax proposals would impose a 7.7 percent surtax on the foreign profits of U.S. multinationals, resulting in a net increase in profit shifting out of the U.S.
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While it is good that policymakers are taking the impact of the economy on tax revenue seriously, it is important to remember that the dynamic effect of increased spending would only offset a small portion of the total spending. In other words, new spending—like tax cuts—rarely pays for itself.
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The redistribution of income from the Biden administration’s tax proposals would involve many winners and losers, not only across different types of taxpayers but also geographically across the country. Launch our new interactive map to see average tax changes by state and congressional district over the budget window from 2022 to 2031.
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Explore President Biden budget proposals, including tax and spending in American Jobs Plan and American Families Plan. See Biden tax and spending proposals.
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