Sens. Kevin Cramer (R-ND) and Christopher Coons (D-DE) have recently introduced a bill laying the groundwork for a possible solution to the problem: a tax on the carbon content of imports. But it falls short of the optimal approach in several ways.
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Of all alcoholic beverages subject to taxation, stiff drinks—and all distilled spirits—face the stiffest tax rates. Like many excise taxes, the treatment of distilled spirits varies widely across the states.
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The price tag of the Inflation Reduction Act’s green energy tax credits is much higher than originally thought. Among other things, the updated analysis indicates the Inflation Reduction Act does not reduce deficits after all.
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Lawmakers should avoid delivering social and economic benefits through the tax code whenever possible and work to simplify or repeal the tax expenditures already in the tax code.
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To address the more challenging parts of the budget, especially the unsustainable growth in mandatory spending, lawmakers should follow up on this debt ceiling agreement with a focus on long-term fiscal sustainability.
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The past few years have brought a renewed push from countries across the globe to combat climate change. In the European Union, policymakers have put a timeline on their climate agenda. By 2050, the EU wants to achieve a net-zero economy. Sean Bray, director of European policy, breaks down how much it would cost to achieve this goal.
In the United States, tobacco is taxed at both the federal and state and sometimes even local levels. These layers of taxes often result in very high levels of taxation—the highest of any consumer item. The retail price of cigarettes, for instance, is more than 40 percent taxes on average. In some states, like Minnesota and New York, more than 50 percent of the price paid by consumers comes from taxes.
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As policymakers shift their focus away from tax rates and look to harmonize the EU’s corporate tax base, they should understand the benefits of full expensing.
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This web tool allows taxpayers to see how cigarette tax revenues have changed since 1955. Across almost all states, a clear pattern of volatility emerges. Tax rate hikes are met with a momentary bump in revenue, followed by a falloff.
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The tax base around the world is shrinking for traditional excise taxes, including taxes on tobacco, alcohol, and motor fuel. But newer excise taxes on things like carbon, cannabis, and ride-sharing are on the rise. What makes a good design for these taxes and where may excise taxes go in the future as the traditional “sin tax” base continues to shrink?
A better-designed tax system should be a goal of any fiscal consolidation package. That said, our simulations suggest that even substantially higher tax increases are insufficient to curtail long-run debt-to-GDP growth.
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Taxing cannabis is brand-new territory. While many states see recreational cannabis as a potential gold mine for tax revenue, the reality of designing a new tax is more complicated.
Rather than continue down the path of growing debt, lawmakers should craft a comprehensive solution. International experience cautions against tax-based fiscal consolidations, but modest tax increases may be part of a successful debt reduction package.
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Even in the face of a global minimum tax, Congress still has a chance to develop a strategic approach in support of U.S. investment and innovation.
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According to the International Monetary Fund (IMF), the U.S. federal government is among the most indebted governments in the world.
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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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In our latest report, we consider several theoretical arguments for carbon taxes and the evidence from carbon taxes implemented around the world related to emissions, economic growth, distribution and revenue recycling options, other environmental taxes, green subsidies, and environmental regulations.
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When a country has a broad base with a simple and transparent tax code, small rate changes have little influence. Therefore, policymakers shouldn’t only focus on rate changes when it comes to increasing tax competitiveness.
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The Carbon Border Adjustment Mechanism (CBAM) is a key aspect of the EU’s broader Fit for 55 package which aims to cut 55 percent of net greenhouse gas (GHG) emissions in the EU by 2030. The growing number of competing climate policies between the EU and U.S., such as tax provisions in the Inflation Reduction Act, could present policymakers on both sides of the Atlantic an opportunity to work together.
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