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Improving Tax Treatment of Structures Offers Commonsense Way to Boost Competitiveness

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 […]

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Taxes, Tariffs, and Industrial Policy: How the U.S. Tax Code Fails Manufacturing

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 […]

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Bonus Depreciation Helps Disadvantaged Workers, Study Finds

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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Policymakers Offer Proposals to Fix Three Upcoming Tax Changes

Three upcoming tax law changes scheduled by the 2017 Tax Cuts and Jobs Act (TCJA) to help offset its revenue losses would be canceled by proposed legislation that would prevent the tax treatment of investment from worsening over the coming years. Three Upcoming Tax Increases on Investment Policy Timing Requirement to amortize R&D expenses over […]

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How the Tax Code Handles Inflation (and How It Doesn’t)

A temporary gas shortage, caused by a hack attack, on much of the East Coast last month and fear of rising inflation have led some people to wonder if the 1970s are back. The Bureau of Economic Analysis report released last week did little to settle this fear, finding that the Personal Consumption Expenditures (PCE) […]

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Expensing Is Infrastructure, Too

The Biden administration has suggested several tax increases for his infrastructure plan. Public infrastructure can help increase economic growth, but by raising taxes on private investment, the net effect on growth may be negative. However, tax options like retaining expensing for private R&D investment or making 100 percent bonus depreciation for equipment permanent would be […]

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Tax Policy Ideas in the Republican Study Committee Budget

While much of the tax policy now under debate aims to increase the tax burden on businesses, several policies in the newly released Republican Study Committee (RSC) budget for Fiscal Year 2022 focus on reducing the tax code’s barriers to investment and saving. The RSC budget contains many possible tax reforms, but two proposals in […]

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Tax Policy Lessons from Down Under

This week the Australian government released its latest budget proposal and two policies that stand out in its fiscal response to the pandemic should be helpful as the economic engine of the country turns back on. The first is full expensing for some investments and the second is the introduction of a loss carryback provision. […]

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IMF Tax Proposals: Shrink Inequality or Sink Post-Pandemic Recovery?

Countries face twin economic challenges with the COVID-19 pandemic: maintain fiscal support to businesses that have been affected by the pandemic and prepare for an uneven and uncertain economic recovery, and work towards budgetary stability and reduce the risks associated with growing public debt. However, moving too fast towards budgetary stability either through tax hikes […]

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Leveling Up: The UK’s Super-Deduction and its Regional Divide

The UK government has made “leveling up”—a push to boost economic performance in less thriving regions of the UK—one of its top policy priorities. The recent introduction of a UK super-deduction for capital investments in plant and equipment will likely contribute to this goal. Higher capital allowances for plant and equipment disproportionally help capital-intensive industries […]