Federal Tax

Boosting American industry is a policy objective shared by many lawmakers and is a key issue at debate in the Build Back Better Act as well as other year-end legislation. Missing from the debates is how the tariffs put in place by the Trump administration, and largely maintained by the Biden administration, are negatively affecting
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One concern that some lawmakers and academics share is whether policies that incentivize investments in capital, such as full expensing or bonus depreciation, may hurt workers by encouraging firms to automate. A new paper casts doubt on that concern and finds the opposite—low-skilled workers are most helped by policies that encourage capital investments because those
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Last week, the Bureau of Labor Statistics (BLS) announced that prices had risen 6.2 percent in the year up to October 2021, the fastest rate since 1990. The persistently high inflation in recent months has made some lawmakers question the need for additional deficit spending, In the short term, the Build Back Better Act (BBBA)
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One unintended consequence of the tax proposals in the Build Back Better Act is a higher potential burden on wireless spectrum investments. Proposals like levying a minimum tax on book income would retroactively tax past spectrum purchases and raise the tax burden on future spectrum purchases. In turn, it could distort the prices companies are willing
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See 2021 Tax Brackets On a yearly basis the Internal Revenue Service (IRS) adjusts more than 60 tax provisions for inflation to prevent what is called “bracket creep.” Bracket creep occurs when people are pushed into higher income tax brackets or have reduced value from credits and deductions due to inflation, instead of any increase in
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The latest version of the Biden administration’s Build Back Better reconciliation package reintroduces a policy that has been tried before—and abandoned: a corporate alternative minimum tax (AMT). It would be a mistake to revive this complex and poorly designed policy. Instead, lawmakers should consider directly reducing corporate tax expenditures. The corporate alternative minimum tax was first introduced
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When examining how tax policy impacts the economy, researchers typically look at labor supply and investment responses. One other channel through which taxes impact the economy has been less studied: innovation. A new National Bureau of Economic Research (NBER) paper reviews the literature and concludes that taxes have a significant impact on the both the
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With corporate and individual rate hikes potentially out of the Build Back Better (BBB) reconciliation package, lawmakers are weighing alternative options to raise revenue. Rather than come up with complicated changes to the tax base, or untested proposals such as mark-to-market for billionaires, they should prioritize options that raise revenue while improving the structure of
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President Biden expanded and fundamentally changed the Child Tax Credit (CTC) for one year in the American Rescue Plan (ARP) passed in March 2021. Policymakers are now deciding the future of the expansion as part of the proposed reconciliation package, but a wide range of estimates for the effects of a permanent expansion is confusing
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Under the House Ways and Means plan to raise taxes on corporations and individuals, the integrated tax rate on corporate income would increase from 47.4 percent to 56.6 percent—the third highest in the OECD. To reduce this burden, policymakers could explore integrating the individual and corporate tax systems. Several developed countries have done this to
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The Congressional Budget Office (CBO) now estimates that the federal government received $370 billion in corporate tax revenue over the past year (fiscal year 2021), matching the record high level from 2007. This is a 75 percent increase over the previous year’s total, reflecting a rebound in corporate profits and the broader economy. This year’s
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