Individual Income and Payroll Taxes

Tax Wedge

Sources of Personal Income, Tax Year 2019

Reviewing reported income helps to understand the composition of the federal government’s revenue base and how Americans earn their taxable income. The individual income tax, the federal government’s largest source of revenue, is largely a tax on labor.

Lithuanian Model Could Help French Workers’ Upward Mobility

Reshaping some of these policies to generate a smoother variation of marginal tax rates over different income levels would likely raise labor supply and encourage the upward mobility of workers and especially that of average-income workers.

Idaho’s Tax Hiking Ballot Measure Is Riddled With Mistakes

Idaho Ballot initiative would impose an incredibly high top marginal rate that would fall on many small businesses, not just high-income earners.

Navigating the Complex Income Tax System in Italy

High marginal tax rates can act as barriers to upward mobility, discouraging people from advancing in their careers.

State Tax Reform and Relief Enacted in 2022

Among the 46 states that held legislative sessions this year, structural state tax reform and temporary tax relief measures were recurring themes.

Tax Reform Options to Improve Wisconsin’s Competitiveness

Given the state’s strong budget surplus and projected continued revenue growth, Wisconsin is in a prime position to enact pro-growth reforms to improve the state’s competitive standing for decades to come.

Marginal Tax Rates and Economic Opportunity

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.

Efforts to Improve Tax Treatment of Saving Gain Traction on Hill

The proposals share a common goal of improving incentives for households to save during a time when inflation is impacting their finances.

Tax Burden on Labor in Europe, 2022

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.

The U.S. Tax Burden on Labor, 2022

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 nearly 30 percent of their wages in taxes.

The Impact of Individual Income Tax Changes on Economic Growth

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.

Pro-Growth Tax Reforms Throughout the Republican Study Committee’s FY 2023 Budget

The United States needs to grow its way out of inflation and set the economy up for continued growth—the tax code provides tools for policymakers to do just that.

Biden’s FY 2023 Budget Would Result in $4 Trillion of Gross Revenue Increases

President Biden’s budget proposes several new tax increases on high-income individuals and businesses, which combined with the Build Back Better plan would give the U.S. the highest top tax rates on individual and corporate income in the developed world.

3 Takeaways from the New Congressional Budget Office Outlook

The CBO projections show policymakers’ top priority over the next five years will need to be cleaning up our country’s fiscal situation while maintaining a pro-growth and competitive tax code.

Two Dozen States Show Why the Kansas Critique of Income Tax Cuts Is Mistaken

The Kansas experience is so infamous that “what about Kansas?” is almost guaranteed to be a question—sometimes as a retort, but often a genuine expression of concern—any time any state explores tax relief. But what about the other two dozen states that have cut their income taxes since then?

Oklahoma Should Prioritize Pro-Growth Relief, Not Gimmicky Rebate Checks

If Sooner State policymakers want to use a portion of their higher revenues to make the economy work better for all Oklahomans, they should consider repealing the franchise tax, trimming the income tax, or both—paired, if desired, with targeted aid to those in the greatest need—not writing a single round of gimmicky checks.

Graduated Rate Income Tax

Flat Tax

The Aftermath of Arizona’s Proposition 208 and the Potential for a Flat Tax

Arizona now joins a growing cohort of states that are moving toward a flat income tax. Pending revenue triggers, the income tax rate will be reduced to 2.5 percent giving Arizona one of the lowest individual income tax rates in the country.