Individual and Consumption Taxes

Tax Burden on Labor in Europe, 2023

To make the taxation of labor more efficient, policymakers should understand the inputs into the tax wedge, and taxpayers should understand how their tax burden funds government services.

How Stable is Cigarette Tax Revenue?

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.

What’s Missing from the Tax Burden Debate

When we discuss tax policy, the conversation inevitably turns to who pays, who should pay, and how much they should pay. Unfortunately, the tax burdens debate is often missing a key point: how income transfer programs—like Social Security or Medicaid—affect households’ tax burdens.

Exploring Excise Tax Trends

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?

The U.S. Tax Burden on Labor, 2023

Although the U.S. has a progressive tax system and a relatively low tax burden compared to the OECD average, average-wage workers still pay more than 30 percent of their wages in taxes.

Green Rush: Principles for Taxing Cannabis

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.

Design Matters When Raising Taxes to Reduce the Deficit and Stabilize the Debt

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.

Ranking Sales Taxes on the 2023 State Business Tax Climate Index

An ideal sales tax applies to a broad base of final consumer goods and services, with few exemptions, and is levied at a low rate.

Minnesota Looks to Raise Taxes despite Projected $17.6 Billion Budgetary Surplus

The FairTax?

The FairTax, on paper, sounds simple. But when you pull back the curtains, this proposal leads to more questions than answers.

How America’s Debt Problem Compares to Other Countries—and Why It Matters

According to the International Monetary Fund (IMF), the U.S. federal government is among the most indebted governments in the world.

Wealth Taxes in Europe, 2023

Instead of reforming and hiking the wealth tax, perhaps policymakers should consider whether the tax is serving its intended objectives, and, if not, consider repealing the tax altogether.

Does the Optimal Tax System Exist?

While research on optimal taxation often focuses on the pure economic implications, it rarely considers cultural and societal differences that can lead to very different outcomes when trying to implement an optimal tax system.

The Role of Pro-Growth Tax Policy and Private Investment in the European Union’s Green Transition

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.

Fast Approaching Debt Limit Deadline and Growing Debt Demand Action

As policymakers look to tackle America’s debt and deficit crisis, they should consider international experiences on successful fiscal consolidations.

Do Consumption Taxes Do a Better Job of Taxing Criminals?

One of the arguments in favor of the FairTax is that it would do a better job of taxing the underground economy than the income tax it is intended to replace.

Carbon Taxes in Theory and Practice

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.

Ranking Individual Income Taxes on the 2023 State Business Tax Climate Index

Individual income tax rates can influence location decision-making, especially in an era of enhanced mobility, where it is easier for individuals to move without jeopardizing their current job, or without limiting the scope of their search for a new one.

Why the Estonian Tax System Would Remain Competitive after Tax Reform

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.

Minnesota’s Omnibus Tax Bill Would Undermine the State Economy

As policymakers in St. Paul finalize this year’s tax bill, they should avoid policies that incentivize the diversion or relocation of capital. Importantly, states do not institute tax policy in a vacuum. The evidence from states’ experiences and the academic literature supports the conclusion that tax competitiveness matters not just to businesses but to human flourishing.