Outside of the pandemic years, this year’s federal deficit is the highest in U.S. history. While tax revenue has increased about 28 percent since the pre-pandemic year 2019, spending has increased about 46 percent. Annual deficits are headed towards $3 trillion over the next few years.
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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.
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Simplicity in the tax code means taxes should be easy for taxpayers to pay and easy for governments to administer and collect.
One year after its enactment, there are concerns about the Inflation Reduction Acts overall fiscal impact, the additional complexity it introduces to the tax system, and the sustainability of its initiatives.
The United Nations (UN) is preparing to flex its muscles on international tax policy. Several developing countries say the OECD’s approach favors richer countries at their expense, and the UN hopes to fix this.
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Congress should reconsider key elements of the IRA, including the book minimum tax and the green energy credits, with an eye towards simplification and fiscal responsibility.
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As the TCJA expiration nears, lawmakers face difficult choices in reforming the CTC. While revenue, distributional and economic effects are important, lawmakers should also focus on simplifying the rules and reducing the administrative challenges.
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Details and analysis of the latest House GOP tax plan, the American Families and Jobs Act. Learn more about the House Republican tax plan.
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Short FormThe technical rules that were once solely the province of tax wonks in D.C. and Paris are being brought out into the public sphere.
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Explore IRS clean energy tax credits, including Direct Pay, the IRA and CHIPS Act tax provisions, and Section 1603 grant program. See more.
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It is hard to imagine the IRS Direct e-File Program operating seamlessly with the complexity of the current U.S. tax system. Instead, lawmakers should first address the more fundamental problem that causes taxpayer frustration: our highly complicated tax code.
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This tax reform plan would boost long-run GDP by 2.5%, grow wages by 1.4%, and add 1.3M jobs, all while collecting a similar amount of tax revenue as the current code and reducing the long-run debt burden.
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Short FormWhat does the tax reform package do well? What does it do poorly? How would it affect me?
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By extending bonus depreciation and introducing neutral cost recovery, the RSC budget would significantly improve the treatment of investment leading to increased growth, expanded employment, and higher wages.
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Lawmakers should avoid delivering social and economic benefits through the tax code whenever possible and work to simplify or repeal the tax expenditures already in the tax code.
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To address the more challenging parts of the budget, especially the unsustainable growth in mandatory spending, lawmakers should follow up on this debt ceiling agreement with a focus on long-term fiscal sustainability.
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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.
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One of the arguments in favor of the FairTax is that it would do a better job of taxing the underground economy than the income tax it is intended to replace.
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When a country has a broad base with a simple and transparent tax code, small rate changes have little influence. Therefore, policymakers shouldn’t only focus on rate changes when it comes to increasing tax competitiveness.
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While the IRS hopes to increase revenue collection and minimize additional burdens on taxpayers, uncertainty remains regarding its ability to deliver, particularly on the latter. Furthermore, some concerns about the original funding package are already surfacing, specifically around insufficient funding for taxpayer services.
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