The Tax Foundation’s Center for Federal Tax Policy uses our dynamic Taxes and Growth (TAG) macroeconomic model to analyze the economic, budgetary, and distributional impact of campaign, legislative, and other popular tax policy proposals. Explore our modeling below.
The Tax Foundation uses and maintains a General Equilibrium Model, known as our Taxes and Growth (TAG) Model to simulate the effects of government tax and spending policies on the economy and on government revenues and budgets.
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The Tax Foundation models tax policy using our proprietary Taxes and Growth model, illustrating the economic, revenue, and distributional impacts of different changes to the federal tax code. We’ve recently implemented improvements to the model that have been underway for the past several years, and we will be detailing them further in our forthcoming model methodology update.
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This tax reform plan would boost long-run GDP by 2.5%, grow wages by 1.4%, and add 1.3M jobs, all while collecting a similar amount of tax revenue as the current code and reducing the long-run debt burden.
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Lawmakers will have to weigh the economic, revenue, and distributional trade-offs of extending or making permanent the various provisions of the TCJA as they decide how to approach the upcoming expirations. A commitment to growth, opportunity, and fiscal responsibility should guide the approach.
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Trump’s tariffs are the largest tax hike since 1982. The tariffs are larger than the tax increases enacted under Presidents George H.W. Bush, Bill Clinton, and Barack Obama.
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A robust collection of 70 potential US tax reform changes and US tax reform options for reforming the tax code. See the comprehensive tax reform guide.
A new analysis finds that the tax increase would reduce average wages by as much as $597 per US worker each year. In some states, the drop in wages would exceed $700 per worker.
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Exempting overtime would unnecessarily complicate the tax code, increase compliance and administrative costs, and reduce neutrality by favoring certain work arrangements over others.
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Allowing full deductibility of residential structures would mean more housing construction, particularly multifamily housing—a practical solution to address housing affordability challenges.
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Depending on the 2024 US election, the current corporate tax rate of 21 percent could be in for a change. See the modeling here.
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Exempting Social Security benefits from income tax would increase the budget deficit by about $1.6 trillion over 10 years, accelerate the insolvency of the Social Security and Medicare trust funds, and create a new hole in the income tax without a sound policy rationale.
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A 15 percent corporate rate would be pro-growth, but it would not address the structural issues with today’s corporate tax base.
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From President Biden calling the Tax Cuts and Jobs Act the “largest tax cut in American history,” to former President Trump claiming that Biden “wants to raise your taxes by four times,” the campaign rhetoric on taxes may be sparking some confusion.
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Universal savings accounts would boost savings for low-income households, allowing them to better withstand economic shocks, such as pandemics and recessions, and plan for major expenses, such as an expanded family, education, and housing needs.
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The Section 232 tariffs on imports of steel and aluminum raised the cost of production for manufacturers, reducing employment in those industries, raising prices for consumers, and hurting exports.
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Policymakers should have two priorities in the upcoming economic policy debates: a larger economy and fiscal responsibility. Principled, pro-growth tax policy can help accomplish both.
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Given that U.S. debt is roughly the size of our annual economic output, policymakers will face many tough fiscal choices in the coming years. The good news is there are policies that both support a larger economy and avoid adding to the debt.
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From a revenue standpoint, about $9 billion of the $11.7 billion in lost revenue would accrue to joint filers earning more than $200,000.
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Examining the revenue, economic, and distributional effects of a hypothetical deal with permanent tax policy changes shows the longer-run trade-offs policymakers would face.
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The House Ways and Means Committee has advanced a tax deal to the House floor that would temporarily—and retroactively—restore two major business deductions for cost recovery and expand the child tax credit through 2025.
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Lawmakers should use the year ahead to thoroughly review and debate lasting, fundamental tax reform and prioritize policies that best boost work and investment incentives in a fiscally responsible manner.
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The fate of the $10,000 cap on state and local tax (SALT) deductions remains uncertain, with some policymakers pushing for an increase or repeal of the cap before its scheduled expiration in 2026.
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Lawmakers will have to weigh the economic, revenue, and distributional trade-offs of extending or making permanent the various provisions of the TCJA as they decide how to approach the upcoming expirations. A commitment to growth, opportunity, and fiscal responsibility should guide the approach.
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Income taxes impose steeper economic costs, and often steeper administrative and compliance costs, than consumption taxes. Moving to a consumption tax would end the tax bias against saving and investment and provide an opportunity to greatly simplify anti-poverty programs embedded in the tax code.
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Pillar Two implementation is underway in many jurisdictions, and many governments are aiming to get their proposals approved before the end of 2023. However, estimating Pillar Two’s impact on government revenue is proving difficult. As a result, only a few countries have publicly presented their findings.
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Now is the time for lawmakers to focus on long-term fiscal sustainability, as further delay will only make an eventual fiscal reckoning that much harder and more painful. Congressional leaders should follow through on convening a fiscal commission to deal with the long-term budgetary challenges facing the country.
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