In our new Options for Reforming America’s Tax Code 2.0, there are several options that would simplify the tax code, including eliminating the alternative minimum tax (AMT). While this move would remove a source of complexity, policymakers should also consider reforming the deductions that created a justification for the AMT in the first place.
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The Biden administration will have to balance the desire to increase social spending through the tax code with the need to collect revenue and have a tax system that is transparent and easy to understand.
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Ohio is one of a growing number of states which experienced revenue increases despite the economic slowdown from the coronavirus pandemic and is now looking to return some of that through tax relief.
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We take a closer look at the most extensive of these proposals: restructuring the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) based on the Family Security Act proposed by Sen. Mitt Romney (R-UT) in February.
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Montana adopted structural reforms to both individual and corporate income taxes during the recently adjourned legislative session, enacting three bills reducing individual tax rates, simplifying the state’s individual tax system, repealing 16 tax credits, and changing the apportionment factor for corporate income tax.
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The income tax changes in HB 2900 as introduced would improve Arizona’s individual income tax structure and economic competitiveness, making the state more attractive to individuals and pass-through businesses .
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Most countries provide tax relief to families with children—typically through targeted tax breaks that lower income taxes. While all European OECD countries provide tax relief for families, its extent varies substantially across countries.
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Thirteen states tax Social Security benefits, a matter of significant interest to retirees. Each of these states has its own approach to determining what share of benefits is subject to tax, though these provisions can be grouped together into a few broad categories.
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Last Friday, Oklahoma Governor Kevin Stitt (R) signed House Bills 2960, 2962, and 2963 into law as part of a budget agreement, bringing the legislature’s tax plans across the finish line. These bills will reduce the state’s corporate and individual income tax rates beginning in tax year 2022.
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With the Biden administration proposing a variety of new taxes, it is worth revisiting the literature on how taxes, particularly on corporate and individual income, can impact economic growth.
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Governments often justify higher tax burdens with more extensive public services. However, the cost of these services can be more than half of an average worker’s salary.
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New Joint Committee on Taxation (JCT) data indicates that the federal tax system is progressive, consistent with similar analysis by the Congressional Budget Office (CBO), and the OECD.
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Most countries’ personal income taxes have a progressive structure, meaning that the tax rate paid by individuals increases as they earn higher wages. The highest tax rate individuals pay differs significantly across Europe, with Denmark (55.9 percent), France (55.4 percent), and Austria (55 percent) having the highest top statutory personal income tax rates among European OECD countries.
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As President Biden’s tax plans are considered in Congress, the future of the $10,000 cap for state and local tax deductions (SALT) is becoming an important part of the tax debate.
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There’s a useful contrast between two revenue options related to President Biden’s infrastructure push. The president’s American Jobs Plan includes a proposal to raise the corporate tax rate to 28 percent. Meanwhile, historically, the gas tax is the main revenue source for transportation funding.
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In his first 100 days as president, Joe Biden has proposed more than a dozen significant changes to the U.S. tax code that would raise upwards of $3 trillion in revenue and reduce incentives to invest, save, and work in the United States.
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Kansas has the revenue cushion it needs to provide tax relief to individuals and businesses and improve the structure of its tax code in the process. These pro-growth reforms would not only help taxpayers amid the pandemic but would also promote economic recovery and growth in a state that is lagging behind its competitors.
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Taxes on goods and services were on average the greatest source of tax revenue for Latin American and Caribbean countries
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While many of the tax proposals work in tandem, some conflicts continue to exist. If lawmakers were able to repeal federal deductibility, reduce income tax rates, finish the job on inventory taxation, and phase out the capital stock tax, this would represent a marked improvement in the state’s tax climate, eliminating several of the most uncompetitive features of the current code.
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The individual income tax is one of the most significant sources of revenue for state and local governments, generating approximately 24 percent of state and local tax collections in FY 2018.
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