Research

Analysis of Federal Proposal to Increase Tobacco and Nicotine Products Taxes

Options for Reforming the Taxation of U.S. Multinationals

The Biden administration’s international tax proposals would impose a 7.7 percent surtax on the foreign profits of U.S. multinationals, resulting in a net increase in profit shifting out of the U.S.

Simplifying the Tax Code and Reducing the Tax Gap: What Can Be Achieved?

Reducing the tax gap is, on the margin, a good way to raise revenue, but is not without costs. Policymakers should consider compliance costs for law-abiding taxpayers as well as administrative costs for the IRS when evaluating measures to reduce the tax gap.

Sales Tax Holidays by State, 2021

Although state budgets may be in unusual places this year, sales tax holidays remain the same as they always have been—ineffective and inefficient.

States Respond to Strong Fiscal Health with Income Tax Reforms

As states close their books for fiscal year 2021, many have much more revenue on hand than they anticipated last year. Eleven states have responded by reducing income tax rates and making related structural reforms as they strive to solidify a competitive advantage in an increasingly competitive national landscape.

Anti-Base Erosion Provisions and Territorial Tax Systems in OECD Countries

From a policy perspective it is appropriate to combat base erosion and profit shifting, but policymakers need to keep in mind the need for simplicity to avoid increasing the compliance burden on taxpayers and administrative burdens on tax authorities.

State Tax Changes Taking Effect July 1, 2021

Thirteen states have notable tax changes taking effect on July 1, 2021, which is the first day of fiscal year (FY) 2022 for every state except Alabama, Michigan, New York, and Texas. Individual and corporate income tax changes usually take effect at the beginning of the calendar year for the sake of maintaining policy consistency throughout the tax year, but sales and excise tax changes often correspond with the beginning of a fiscal year.

Net Operating Loss Policies in the OECD

During the COVID-19 pandemic, several OECD countries temporarily expanded their NOL carrybacks and carryforwards to provide relief to illiquid but otherwise solvent businesses. These policies should be made permanent and, where necessary, expanded.

Biden Administration Changes to GILTI and FDII Will Yield Automatic State Tax Increases

State taxation of GILTI is unconventional and economically uncompetitive and will become even more so if the federal government adopts a more aggressive approach to taxing GILTI, as outlined in the American Jobs Plan Act.

A Comparison of the Tax Burden on Labor in the OECD, 2021

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.

Taxing Capital – An International Comparison

The taxation of capital—at both the individual and the corporate level—is much debated and affects economic growth by lowering the incentives to save and invest.

States Consider Digital Taxes Amidst Conflicting Rationales

Digital advertising, social media, and data tax proposals have been introduced in nine states following enactment of Maryland’s digital advertising tax, which has since been postponed a year due to administrative and legal challenges.

Location Matters 2021: The State Tax Costs of Doing Business

A landmark comparison of corporate tax costs in all 50 states, Location Matters provides a comprehensive calculation of real-world tax burdens, going beyond headline rates to demonstrate how tax codes impact businesses and offering policymakers a road map to improvement.

Effects of Proposed International Tax Changes on U.S. Multinationals

The international corporate tax changes in President Biden’s tax plan would increase tax rates on domestic income more than on foreign income, resulting in a net increase in profit shifting out of the US, according to our Multinational Tax Model.

Modernizing Rental Car and Peer-to-Peer Car Sharing Taxes for a Post-Pandemic Future

The economic evidence shows that travelers and tourists are sensitive to price changes for rental cars and adjust their behavior to avoid the tax, harming state economies and the travel sector right as the industry is trying to recover from the effects of the coronavirus pandemic.

Reviewing the Federal Tax Treatment of Research & Development Expenses

Simplifying the R&D credit, making it more accessible for smaller firms, and ensuring full cost recovery for R&D expenses by canceling the upcoming R&D amortization are three things policymakers should consider when trying to improve the tax code for R&D.

State Conformity to Federal Pandemic-Related Tax Provisions in CARES and ARPA

With so many federal changes occurring in such a short amount of time—including some federal provisions changing more than once and a major change to the treatment of UC income occurring in the middle of tax filing season—state legislators have faced the challenge of responding to these changes quickly in order to provide certainty to taxpayers.

Capital Cost Recovery across the OECD, 2021

The ongoing pandemic has once again highlighted the importance of investment. To address the economic fallout of the pandemic, several OECD countries have temporarily accelerated depreciation schedules for various assets.

Marginal Effective Tax Rates and the 2021 UK Budget

The 2021 UK budget introduces a two-year super-deduction of 130 percent for plant and equipment and a delayed corporate tax rate increase from 19 percent to 25 percent in 2023. These policies have differential impacts on marginal effective tax rates for different assets, implying investment incentives will not be uniform.

Four Questions Treasury Must Answer About the State Tax Cut Prohibition in the American Rescue Plan Act

The American Rescue Plan Act’s restriction on states’ Fiscal Recovery Funds being used to directly or indirectly offset a net tax cut is vague and raises difficult questions of interpretation and application. A broad interpretation of this prohibition may be unconstitutional.