Short FormThe federal income tax drives the tax code’s progressivity. In 2021, taxpayers with higher incomes paid much higher average income tax rates than taxpayers with lower incomes.
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Given that U.S. debt is roughly the size of our annual economic output, policymakers will face many tough fiscal choices in the coming years. The good news is there are policies that both support a larger economy and avoid adding to the debt.
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Designing tax policy in a way that sustainably finances government activities while minimizing distortions is important for supporting a productive economy.
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The “Bring Chicago Home” ballot measure would make Chicago’s tax structure substantially less neutral by raising taxes on some property transfers while decreasing taxes on others.
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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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A tax based on alcohol content would be the most neutral, straightforward means of raising revenue from alcohol. But since such a tax would constitute a redesign of the entire alcohol tax system at both the state and federal levels, the next best approach is to create more categories for new products.
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While the approaches differ, they share a reliance on similar linkages: new capital investment drives productivity growth, which grows the economy and raises wages for workers.
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The pandemic led to one of the largest fiscal responses in U.S. history, impacting households across the income distribution.
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The CBO projects deficits will be higher than historical levels, largely due to growth in mandatory spending programs While some recent legislation has reduced the deficit, the Inflation Reduction Act is proving to be more expensive than originally promised.
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One particular provision of the Biden administration’s proposal to ban so-called “junk fees” would have unintended consequences.
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Two pieces of tobacco legislation in Michigan have the potential to decrease state tax collections by $320 million per year, deter smokers from switching to less harmful products, and increase illicit trade and crime.
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Lawmakers should prioritize creating a tax system that supports investment more broadly rather than subsidizing specific industries and allowing broad, neutral pro-investment provisions to expire.
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Nebraskans need property tax relief and there are sound ways to provide it. However, increasing the sales tax rate to the highest in the country and dramatically increasing cigarette excises is not sound tax policy.
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While some recommendations follow the principles of sound tax policy and may improve the District’s tax climate, some proposals make the tax code more complex and less neutral, potentially disincentivizing investment and business activity.
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In such a determinant semester for Europe, principled tax policy can be an important tool for a more competitive European Union.
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At the beginning of 2024, a fee on certain methane emissions took effect. While insignificant on its own, it is the first U.S. federal-level effort to price greenhouse gas emissions to combat climate change.
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Thirty-four states will ring in the new year with notable tax changes, including 15 states cutting individual or corporate income taxes (and some cutting both).
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An alcohol by volume (ABV) tax could replace the existing alcohol tax system. An ABV tax would make alcohol taxes simpler, more transparent, and substantially more neutral than the current system.
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A national-level carbon price—a tax or cap-and-trade scheme placed on CO2 or other greenhouse gases—may seem distant in the U.S., especially since the Inflation Reduction Act, which included major climate policy, omitted one. However, policymakers on both sides of the aisle have been nibbling around the edges of carbon taxes.
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Marijuana taxation is one of the hottest policy issues in the United States. Twenty-one states have implemented legislation to legalize and tax recreational marijuana sales.
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