President Biden’s new budget proposal outlines several major tax increases targeted at businesses and high-income individuals that would bring U.S. income tax rates far out of step with international norms.
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Adopting a distributed profits tax would greatly simplify U.S. business taxes, reduce marginal tax rates on investment, and renew our country’s commitment to pro-growth tax policy.
6 min read
Designing tax policy in a way that sustainably finances government activities while minimizing distortions is important for supporting a productive economy.
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Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections:
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Immediately balancing the $20 trillion budget shortfall would take drastic, unwanted policy changes. Instead, lawmakers should target a more achievable goal, such as stabilizing debt and deficits with an eye toward comprehensive tax reform that can produce sufficient revenue with minimal economic harm.
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Despite robust revenues, some state lawmakers are champing at the bit to raise taxes on higher-income households, sometimes to extraordinary levels.
7 min read
Forty-three states adopted tax relief in 2021 or 2022—often in both years—and of those, 21 cut state income tax rates. It’s been a remarkable trend, driven by robust state revenues and an increasingly competitive tax environment.
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The latest IRS data shows that the U.S. federal individual income tax continued to be progressive, borne primarily by the highest income earners.
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A combination of long-standing IRS operational deficiencies, the agency’s temporary closure due to the pandemic, and the now-expired pandemic relief produced a perfect recipe for a paper backlog.
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In a coordinated effort, lawmakers in seven states that collectively house about 60 percent of the nation’s wealth—California, Connecticut, Hawaii, Illinois, Maryland, New York, and Washington—are introducing wealth tax legislation on Thursday.
7 min read
The IRS recently released the new inflation adjusted 2023 tax brackets and rates. Explore updated credits, deductions, and exemptions, including the standard deduction & personal exemption, Alternative Minimum Tax (AMT), Earned Income Tax Credit (EITC), Child Tax Credit (CTC), capital gains brackets, qualified business income deduction (199A), and the annual exclusion for gifts.
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While there are many factors that affect a country’s economic performance, taxes play an important role. A well-structured tax code is easy for taxpayers to comply with and can promote economic development while raising sufficient revenue for a government’s priorities.
41 min read
Massachusetts’ competitive tax advantage in New England is driven primarily by its competitive individual income tax rate and its sales and use tax structure. If the Commonwealth changes its tax code in ways that narrow the base or increase the rate, it cedes greater tax competitiveness to other states, regionally and nationally.
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If ever there was a paycheck protection program, defending people from bracket creep may be the most important one ever designed.
6 min read
Every change to a state’s tax system makes its business tax climate more or less competitive compared to other states and makes the state more or less attractive to business.
7 min read
The mix of tax sources states choose can have important implications for both revenue stability and economic growth, and the many variations across states are indicative of the different ways states weigh competing policy goals.
29 min read
Some 40 years ago, the U.S. dealt with high inflation and slow economic growth. Then as now, the solution is a long-term focus on stronger economic growth and sustainable federal budgets.
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Reviewing reported income helps to understand the composition of the federal government’s revenue base and how Americans earn their taxable income. The individual income tax, the federal government’s largest source of revenue, is largely a tax on labor.
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