Federal Tax

Today, lawmakers and the administration are exploring policies to meet the need to increase investment and economic output amid an economic downturn. Improving the cost recovery treatment of long-lived assets is a cost-effective tax policy change that can boost investment and growth. While full expensing is one approach and is a policy that lawmakers are
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In a previous post, I outlined portions of the dependent-related provisions in the recently-passed HEROES Act (H.R. 6800), focusing on changes to the EITC, CTC, and CDTC. Although the legislation increases and expands each of the credits, the changes are untimely, intentionally temporary, and lack sufficient stability, simplicity, and transparency. Timing The HEROES Act enters
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Key Findings Removing tax policy barriers can help businesses and individuals invest, work, create jobs, and lift the economy during a post-pandemic recovery without requiring lawmakers to create new spending programs. One of the most cost-efficient options available to lawmakers is to improve the cost recovery treatment of structures. Residential structures must be depreciated over
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The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, a draft released Tuesday by Democrats in the U.S. House of Representatives, is the first bid to provide additional economic relief to individuals and businesses affected by the coronavirus pandemic and economic downturn. The bill is projected to cost about $3 trillion—a third greater than
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Key Findings Average workers in the United States face two major taxes on wage income: the individual income tax and the payroll tax (levied on both the employee and the employer). Although slightly more than half of a U.S. worker’s payroll tax burden is paid by their employer, the worker ultimately pays this tax through
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Like the federal government, states play a critical role in responding to the coronavirus outbreak. Legislators across the country are working to respond as quickly and effectively as possible. While direct public health interventions and assistance to those in economic distress are the most urgent needs, tax policy plays an important role in this process,
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The U.S. Senate on Tuesday passed the Paycheck Protection Program Increase Act, which aims to top off the Paycheck Protection Program (PPP) established in the CARES Act last month. When Congress considers its next options, in so-called Phase 4 economic relief, policymakers should revisit some of the tax questions about the PPP in addition to
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Short-term policies to “stimulate” economic growth after COVID-19 run the risk of producing short-term results and would likely prove insufficient and ineffective for sparking a long-term recovery. Lawmakers at all levels of government should focus on deliberate and comprehensive strategies to clear a path of the most economically harmful taxes that will prevent businesses and
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In addition to providing economic relief to individuals and loans to businesses struggling during the coronavirus crisis, the Coronavirus Aid, Relief, and Economic Security (CARES) Act changed several tax provisions to increase liquidity to ensure firms survive a large decline in cash flow. Among other tax changes, the CARES Act loosened rules governing net operating
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Key Findings The Child Tax Credit (CTC) is a partially-refundable tax credit available to parents with qualifying dependents under the age of 17. Like other tax credits, the CTC reduces tax liability dollar-for-dollar of the value of the credit. Taxpayers may claim a maximum credit of $2,000 for each child, with a portion of the
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The coronavirus crisis demands urgent solutions but also careful consideration. How can governments best deliver immediate relief while ensuring that tax policies remain simple, transparent, neutral, and stable?  What tax changes have different levels of government already enacted to address the crises and what can they learn from each other?  What could the next phase of relief look like and
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