President Biden and congressional policymakers have proposed several changes to the corporate income tax to raise revenue for new spending programs.

Our new modeling analyzes the economic, revenue, and distributional impact of these proposals. 👇

buff.ly/3qUbeHz
President Biden has proposed raising the U.S. corporate income tax rate from 21 percent to 28 percent and imposing a 15 percent minimum tax on the book income of large corporations.
An increase in the federal corporate tax rate to 28 percent would raise the U.S. federal-state combined tax rate to 32.34 percent, highest in the OECD and among Group of Seven (G7) countries, harming U.S. economic competitiveness and increasing the cost of investment in America. Image
Increasing the U.S. federal corporate tax rate to 28 percent would reduce long-run economic output by 0.8 percent, eliminate 159,000 jobs, and reduce wages by 0.7 percent, according to our TAG 2.0 General Equilibrium Model: taxfoundation.org/biden-corporat… Image

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More from @TaxFoundation

31 Mar
The legalization and taxation of recreational marijuana remains one of the hottest trends in state taxation.

Currently, 16 states and D.C. have passed bills or approved ballot measures that allow for the sale of recreational marijuana: tax.foundation/3cFu2Wm Image
Alaska, Arizona, California, Colorado, D.C., Illinois, Maine, Massachusetts, Michigan, Montana, Nevada, New Jersey, New York, Oregon, South Dakota, Vermont, Washington have passed bills or approved ballot measures that allow for the sale of recreational marijuana.
And more states are poised to pass legislation this session.

In total, actual recreational marijuana sales are happening in 11 states.
Read 23 tweets
31 Mar
The government of Hartford County, Connecticut is in line to receive $173 million in local aid under the American Rescue Plan Act.

There’s only one problem: the government of Hartford County doesn’t exist.

buff.ly/3dle6rn @JaredWalczak
Nor do any of Connecticut’s other counties have county-level government despite being allocated a collective $691 million under the bill.
The traditional county lines are useful for certain purposes, like electing a few countywide officials, but there is no proper county government to receive, let alone spend, these funds.
Read 10 tweets
31 Mar
Our new study outlines how several OECD countries allowed businesses to more quickly expense investments during the pandemic: buff.ly/39xKzto @ElkeAsen ImageImageImageImage
While the temporary nature of most of these expensing and accelerated depreciation provisions reduces their tax revenue impact in the long run, it also limits their long-run economic benefits. ImageImage
Temporary provisions may encourage businesses to shift future investments forward to take advantage of the larger deductions but would not raise the level of investment permanently.
Read 9 tweets
30 Mar
Income tax repeal is on the agenda in West Virginia, with Gov. Jim Justice and Republicans in both the House and Senate releasing plans for dramatically lowering or eliminating the state’s individual income tax. buff.ly/3fEia9d @JaredWalczak #wvleg
Despite their shared aims, these plans represent vastly different approaches. They are not even aligned on which income should benefit from rate reductions.
House Republicans propose a straightforward reduction in income tax rates, while their Senate counterparts initially exclude investment income, and the governor excludes pass-through business income as well as investment income.
Read 10 tweets
29 Mar
President Biden could provide business and household relief by eliminating Trump tariffs: buff.ly/3oXN0v2 @ericadyork Image
Tariffs raise prices and reduce the quantity of goods available to U.S. businesses and consumers, which results in lower incomes, reduced employment, and lower economic output in the United States.
Using the Tax Foundation General Equilibrium Model, we estimated that the Trump administration tariffs would amount to an annual tax increase of $80 billion (the 17th largest tax increase since 1940).
Read 8 tweets
29 Mar
Excise taxes are commonly employed to deter consumption or internalize societal costs, but in West Virginia, Gov. Jim Justice (R) is proposing to increase the excise tax on soft drinks to pay for part of an income tax reform. buff.ly/3wcSIgu @UBoesen
He’s not alone in considering ways to raise revenue as state lawmakers look to a time after the pandemic and ponder how their tax codes impact taxpayer behavior.
It seems almost certain, for example, that the post-pandemic world will include more remote work opportunities, which will allow taxpayers more freedom to shop for competitive tax environments with less considerations of the physical location of their employer.
Read 8 tweets

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