Key Findings By driving changes to the climate, carbon emissions will impose major long-term economic costs, both here in the U.S. and around the world. Carbon taxes are an option to make the market reflect future costs of carbon emissions, discouraging emissions and incentivizing development and implementation of clean technology. Carbon taxes also come with design challenges and economic costs, […]
The taxation of large companies has been in the spotlight recently as governments around the world have sought to make significant changes to how corporate profits are taxed in a global economy. Last year more than 130 jurisdictions agreed to an outline of policies that would change where companies pay taxes and institute a global minimum tax of 15 percent. […]
The Biden administration has put forward significant plans for changing tax policy, including tax changes that would impact workers. While the administration is trying to narrowly target tax hikes to individuals who earn more than $400,000 and provide tax relief to families, it is helpful to understand what the tax burden looks like for workers outside of those potential policy changes. Workers […]
A centerpiece of the Build Back Better Act (BBBA) as passed by the House last year was drug pricing legislation, which could be included in the next version of the BBBA, now rebranded as an inflation-control, climate, and deficit-reduction bill. While headline inflation is at an alarming rate, with the most recent 12-month reading at 8.5 percent, prescription drugs are […]
After corporate tax revenue came in at a record high of $372 billion in fiscal year 2021, we have been eagerly awaiting the forecast for fiscal year 2022, which the Congressional Budget Office (CBO) normally publishes in January but now plans for the week of May 23rd. The White House has included a forecast in its annual budget, predicting corporate […]
President Biden’s budget came out this week with a very sensible message about the need for stronger economic growth and sound fiscal policy: “Critically, my Budget would also keep our Nation on a sound fiscal course. It fights inflation and helps families deal with rising costs by growing our economy, making more goods in America, and lowering the costs families […]
This week, President Biden introduced a new tax proposal as part of the White House fiscal year 2023 budget to raise taxes on households with net wealth over $100 million. The proposal would require wealthy households to remit taxes on unrealized capital gains from assets such as stocks, bonds, or privately held companies. Biden’s proposal would take the tax code […]
While much of Washington is focused on negotiations over a government spending bill on competitiveness with China, Reps. Jackie Walorski (R-IN) and Jim Banks (R-IN) introduced a commonsense policy to boost U.S. competitiveness. The Renewing Investment in American Workers and Supply Chains Act would improve the tax treatment of investments in structures, such as factories and warehouses, which currently face […]
No policy idea is ever truly gone. As oil prices have skyrocketed, Sen. Sheldon Whitehouse (D-RI) and Rep. Ro Khanna (D-CA) have introduced a bill targeted at oil company profits. While billed as a Windfall Profits Tax, the proposal is really an excise tax. The United States has implemented such a tax before, in 1980, and it resulted in lower […]
Key Findings Policymakers on both the left and right have brought industrial policy back into focus after slow growth over the past few decades and growing concern over the state of America’s manufacturing sector. In the context of the tax code, industrial policy usually comes in the form of non-neutral subsidies for specific industries or sectors, or taxes on imports […]
In his State of the Union Address, President Biden called for leveling the global research & development (R&D) playing field by increasing federal R&D spending, specifically by asking Congress to pass the bipartisan United States Innovation and Competition Act (USICA). While USICA proposes increasing government investment in R&D, it does not address a recent tax change that penalizes private investment […]
This spring, the United States Food and Drug Administration (FDA) is expected to announce a national ban on menthol-flavored cigarettes and cigars with a characterizing flavor, an attempt to limit tobacco consumption, and, as a result, improve public health. But given the high level of taxation on tobacco products (on average, excise taxes alone make up 40 percent of the […]
The global minimum tax has upended many conversations about international tax policy, including in the United States. The goal of the policy is to set a worldwide 15 percent minimum effective tax rate on corporate profits and enforce it through a set of interconnected rules. If enough countries adopt those rules, then even those that do not will see profits […]
Rising inflation has become a dominant issue for policymakers in the past year, with the most recent report finding inflation has risen 7.5 percent over the past 12 months. Some lawmakers have proposed suspending the gas tax to reduce inflation. Rising gas prices are certainly one piece of the inflation puzzle—but suspending the gas tax is a uniquely ill-suited policy […]
Policy and economic differences among OECD countries have created variances in how they raise tax revenue, with the United States deviating substantially from the OECD average on some sources of revenue. Different taxes create different economic impacts, so policymakers should always consider how tax revenue is raised and not just how much is raised. This is especially important as the […]
During the pandemic, policymakers relied on the Internal Revenue Service (IRS) to administer business relief through the tax code. The emergency relief, including business tax refunds for net operating losses (NOLs), was intended to quickly help businesses that lost their source of income during the pandemic. A new report from the Government Accountability Office (GAO) finds many businesses have yet […]
The Build Back Better legislative package includes both tax hikes and tax cuts, which contain two contrasting tax policy narratives. Tax hikes include corporate tax increases on foreign income and a new 15 percent domestic minimum tax, and green energy tax incentives provide a tax cut. Policymakers also sought to protect some pre-existing tax incentives from being negated by the domestic […]
Consumer prices rose by 7 percent in 2021, the highest annual rate of inflation since 1982. Where did this inflation come from and what might its impacts be? Tax and fiscal policy offer important clues. Initially thought to be “transitory” and largely the result of pandemic-related supply-chain issues, many economists at the Federal Reserve and elsewhere now see persistent inflation […]
The Internal Revenue Service (IRS) has released data on individual income taxes for tax year 2019, showing the number of taxpayers, adjusted gross income, income tax paid, and income tax shares by income percentiles.[1] The new data outlines the tax system under the second year of the Tax Cuts and Jobs Act (TCJA), the last year before the onset of […]
As the Omicron variant continues to sweep through the world, it is possible there will be renewed talks of fiscal support if economic growth declines. For this reason, it is worth reviewing how various countries responded to the pandemic over the past two years. One thing stands out: The U.S. fiscal response was among the largest of any industrialized country. […]