The research below explores the economics of tax policy and the intellectual underpinnings of our efforts to quantify tax changes using our dynamic Taxes and Growth (TAG) macroeconomic model.
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.
9 min read
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.
4 min read
Lawmakers should use the most comprehensive analytical tools available to them—like dynamic scoring—to make informed decisions about policy changes.
5 min read
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.
50 min read
Some tax hikes are more damaging than others, according to Congressional Budget Office (CBO) and new Tax Foundation economic modeling.
5 min read
Short FormWhen you hear about tax policy, you may think of the IRS, the agency responsible for collecting federal taxes. But who is responsible for drafting, reviewing, assessing, and passing tax legislation at the federal level?
4 min read
Contrary to the president’s promises, the tariffs will cause short-term pain and long-term pain, no matter the ways people and businesses change their behavior.
5 min read
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.
9 min read
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.
4 min read
While tariffs are often presented as tools to enhance US competitiveness, a long history of evidence and recent experience shows they lead to increased costs for consumers and unprotected producers and harmful retaliation, which outweighs the benefits afforded to protected industries.
If lawmakers are serious about pro-growth policies and fiscal responsibility, they will need to put policies forward that achieve those goals. Simply adjusting the baseline doesn’t reduce actual deficits in the coming years.
7 min read
Using tariff policy to reallocate investment and jobs is a costly mistake—that’s a history lesson we should not forget.
6 min read
Estimating the economic effects of different types of taxes informs policymakers about the trade-offs of raising revenue in a given way.
5 min read
The gap between statutory rates and average effective tax rates for personal income tax in the European Union varies significantly, affecting the efficiency and simplicity of the tax system.
32 min read
Lawmakers should prioritize creating a tax system that supports investment more broadly rather than subsidizing specific industries and allowing broad, neutral pro-investment provisions to expire.
3 min read
Lawmakers should simplify the tax code so that taxpayers can understand the laws and the IRS can administer them with minimum cost and frustration.
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.
45 min read
Bond markets are screaming for a return to deficit reduction politics. Unfortunately, most policymakers are failing to listen to what the markets are telling them.
As increased political attention focuses on the state of the American worker, expect to see a resurgence of the argument that the labor share of income is in decline.
5 min read
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.
35 min read
Lawmakers should focus on simplifying the federal tax code, creating stability, and broadly improving economic incentives. There are incremental steps that can be made on the path to fundamental tax reform.
Making expensing permanent is especially important now, when the economy is threatened with a recession and inflation remains high.
7 min read
A better-designed tax system should be a goal of any fiscal consolidation package. That said, our simulations suggest that even substantially higher tax increases are insufficient to curtail long-run debt-to-GDP growth.
Rather than continue down the path of growing debt, lawmakers should craft a comprehensive solution. International experience cautions against tax-based fiscal consolidations, but modest tax increases may be part of a successful debt reduction package.
6 min read
While research on optimal taxation often focuses on the pure economic implications, it rarely considers cultural and societal differences that can lead to very different outcomes when trying to implement an optimal tax system.
4 min read