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.
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.
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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.
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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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.
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If Wisconsin policymakers return some of the projected continued revenue growth to taxpayers in a structurally sound and pro-growth manner, those tax cuts will benefit businesses and individuals throughout the state, leading to more innovation, more job and wage growth, more economic opportunities, and more vibrant communities.
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.
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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.
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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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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.
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While some temporary policies can help in a crisis, policymakers should focus their efforts on sustainable policies that support growth and the resilience of businesses (and government coffers) over the long term.
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Scandinavian countries are well known for their broad social safety net and their public funding of services such as universal health care, higher education, parental leave, and child and elderly care. So how do Scandinavian countries raise their tax revenues?
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Michiganders will pay a lower individual income tax rate next year thanks to high general fund revenues, but these savings may be short-lived following an opinion released by the state’s attorney general.
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While the IRS hopes to increase revenue collection and minimize additional burdens on taxpayers, uncertainty remains regarding its ability to deliver, particularly on the latter. Furthermore, some concerns about the original funding package are already surfacing, specifically around insufficient funding for taxpayer services.
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The Portuguese government has introduced plans to exempt “essential” food items from its value-added tax (VAT) in response to the recent inflation spike. While this may sound like a reasonable measure on the surface, it comes with numerous unintended consequences that compromise its effectiveness.
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Spain should follow the examples of Italy and the UK and enact tax reforms that have the potential to stimulate economic activity by supporting private investment while increasing its international tax competitiveness.
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Accelerating its current individual income tax triggers and setting up the corporate income tax for eventual elimination would increase Missouri’s attractiveness among states at a time when businesses are increasingly mobile and tax competition matters more than ever.
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When designed well, excise taxes discourage the consumption of products that create external harm and generate revenue for funding services that ameliorate social costs. The effectiveness of excise tax policy depends on the appropriate selection of the tax base and tax rate, as well as the efficient use of revenues.
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If Alabama continues on its current path, its treatment of remote workers would be even more aggressive than that of New York—a shaky legal foundation.
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