Research

Tax Reform Isn’t Done

Expiring provisions, scheduled tax increases on investment, unresolved issues in the code—The Tax Cuts and Jobs Act was passed, but tax reform isn’t done yet.

Getting “Real” by Indexing Capital Gains for Inflation

Many elements of the income tax are adjusted for inflation, such as tax brackets, but the purchase price of assets that are later sold for capital gains or losses is not. Here’s the case for changing that.

Marriage Penalties and Bonuses under the Tax Cuts and Jobs

The marriage penalty and the marriage bonus are each ways that the income tax code violates the principle of neutrality and affects taxpayer behavior. Here’s how each works and why they deserve attention.

Tax Reform Moves to the States: State Revenue Implications and Reform Opportunities Following Federal Tax Reform

Federal tax reform gives states an opportunity to improve their own tax codes. This study surveys the federal provisions to which states conform, what each state can expect from federal tax changes, and what options are available to them.

State Strategies to Preserve SALT Deductions for High-Income Taxpayers: Will They Work?

The scramble to restore the full state and local tax deduction for high-income taxpayers has resulted in inventive proposals that, for both legal and practical reasons, are unlikely to succeed.

State Tax Changes That Took Effect on January 1, 2018

Preliminary Details and Analysis of the Tax Cuts and Jobs Act

According to the Tax Foundation’s Taxes and Growth Model, the Tax Cuts and Jobs Act would lead to a 1.7 percent increase in GDP over the long term, 1.5 percent higher wages, an additional 339,000 full-time equivalent jobs, and cost $1.47 trillion on a static basis and by $448 billion on a dynamic basis.

Trends in State Tax Policy, 2018

In 2018, trends to watch in state tax policy will include reductions in corporate tax rates, the spread of gross receipts taxes, new and lower taxes on marijuana, estate tax repeal, a wait-and-see approach on federal tax reform, and more.

Measuring Marginal Tax Rate on Capital Assets

This study demonstrates how Tax Foundation’s TAG model calculates the weighted average METRs for different capital assets in the corporate and noncorporate sectors. The high marginal rates of up to 53 percent in the corporate sector illustrate why there is an urgent need for business tax reform.

Preliminary Details and Analysis of the Senate’s 2017 Tax Cuts and Jobs Act

This comprehensive overview of the of the Senate Tax Cuts and Jobs Act includes a summary of its details and macroeconomic analysis of how it would impact federal revenue, wages, GDP, and after-tax incomes.

Wireless Taxes and Fees in 2017

A typical American household with four wireless phones paying $100 per month for wireless voice service can expect to pay about $221 per year in wireless taxes, fees, and surcharges.

Time to Shoulder Aside “Crowding Out” As an Excuse Not to Do Tax Reform

This paper evaluates the arguments for and against “crowding out” and compares these arguments to empirical studies. It discusses the impact of tax changes on the allocation of national income between consumption and saving, and the allocation of saving between private investment and government deficits. It finds that the crowding out argument is largely based on a mistaken assumption about the flexibility and availability of saving and credit for the financing of government deficits and private investment.

Cigarette Taxes and Cigarette Smuggling by State, 2015

Excessive tax rates on cigarettes approach de facto prohibition in some states, inducing black and gray market movement of tobacco products into high-tax states from low-tax states or foreign sources.

Updated Details and Analysis of the 2017 House Tax Cuts and Jobs Act

This comprehensive overview of the of the House Tax Cuts and Jobs Act includes a summary of its details and macroeconomic analysis of how it would impact federal revenue, wages, GDP, and after-tax incomes.

2017 International Tax Competitiveness Index

Hampered by high marginal tax rates and complex business tax rules, the United States again ranks towards the bottom of the pack on our 2017 International Tax Competitiveness Index, placing 30 out of 35 OECD countries.

There Is More Than Meets the Eye When Analyzing the UK’s Corporate Tax Cut

When taking a closer look at the UK’s recent corporate tax reform experiment, it becomes clear that there was significantly more at work than just a simple rate cut. Increasing the effective marginal tax rate on new investments could have had a negative effect on wages, potentially offsetting the positive effects from the corporate rate cut.

Labor Bears Much of the Cost of the Corporate Tax

Recent empirical evidence shows that workers bear upwards of 70 percent of the corporate income tax burden, much more than popular tax models claim, which make errors in how they account for super-normal returns and the openness of our economy.

Sales Tax Base Broadening: Right-Sizing a State Sales Tax

Due in part to historical accident and also to the proliferation of exemptions, the effectiveness of the state sales tax continues to erode. The median state sales tax, which should apply to all personal consumption, is nonly applied to 23 percent of personal consumption.

2018 State Business Tax Climate Index

For 15 years, our State Business Tax Climate Index has been the standard for legislators and taxpayers to understand how their state’s tax code compares and how it can be improved. Now, for the first time ever, you can explore our Index’s 100+ variables in an easy to use, interactive format.

Economic and Budgetary Impact of Temporary Expensing

Instead of making expensing temporary, lawmakers could pursue other ways to speed up cost recovery with permanent economic gains and without drastically reducing revenue. One way to do that is by enacting “depreciation indexing.”