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 General Equilibrium Model, known as our Taxes and Growth (TAG) 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.
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.
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The Tax Foundation models tax policy using our proprietary Taxes and Growth model, illustrating the economic, revenue, and distributional impacts of different changes to the federal tax code. We’ve recently implemented improvements to the model that have been underway for the past several years, and we will be detailing them further in our forthcoming model methodology update.
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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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Policymakers should have two priorities in the upcoming economic policy debates: a larger economy and fiscal responsibility. Principled, pro-growth tax policy can help accomplish both.
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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.
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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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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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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The Biden administration has pledged to not raise taxes on anyone earning less than $400,000 a year. However, the administration’s corporate tax proposals would likely violate that pledge, given that corporations are comprised of people who also might earn less than $400,000.
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Details and analysis of the American Jobs Plan tax proposals. Learn more about the major tax changes in the proposed Biden infrastructure plan.
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With the Biden administration proposing a variety of new taxes, it is worth revisiting the literature on how taxes, particularly on corporate and individual income, can impact economic growth.
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The Biden administration’s proposed American Families Plan includes several major tax changes. Explore the tax proposals in the American Families Plan.
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There’s a useful contrast between two revenue options related to President Biden’s infrastructure push. The president’s American Jobs Plan includes a proposal to raise the corporate tax rate to 28 percent. Meanwhile, historically, the gas tax is the main revenue source for transportation funding.
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The international corporate tax changes in President Biden’s tax plan would increase tax rates on domestic income more than on foreign income, resulting in a net increase in profit shifting out of the US, according to our Multinational Tax Model.
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As policymakers consider tax options to boost the U.S. economy’s long-run economic growth, they should consider reforms that would increase growth the most while minimizing forgone tax revenue.
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