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How Expensing for Capital Investment Can Accelerate the Transition to a Cleaner Economy

Key Findings Expensing for capital investments would increase new investment and capital stock turnover, supporting the replacement of old capital with more environmentally friendly structures, machinery, and equipment. Lowering the cost of investment would eliminate the tax bias against more capital-intensive energy efficiency improvement projects. Neutral cost recovery for structures would increase apartment building construction, […]

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Tax Extenders Hitch a Ride on Omnibus and COVID-19 Relief Deal

Tax extenders are no stranger to hitching a last-minute ride on year-end legislation. This year they made another last-minute appearance, finding a hold in their own division of the 5,593-page bill to fund the government through the fiscal year and provide additional coronavirus relief through March. If you’ve followed the extenders debate, you know that […]

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Increasing the Tax Burden on Capital Investment and Automation Hurts Workers

Over the past half decade, there has been an ongoing debate about how automation and the use of robots in the workplace has impacted workers’ wages and employment. Recently, economists Andrea Manera and Daron Acemoglu of the Massachusetts Institute of Technology (MIT) and Pascual Restrepo of Boston University examined whether tax policy favors certain forms […]

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Prospects for Federal Tax Policy After the 2020 Election

As Americans receive more clarity on the outcome of the 2020 presidential and congressional elections, the prospects for federal tax policy headed into 2021 are also becoming clearer. A Biden administration may have to work with a Republican Senate majority (pending the results of runoff elections in Georgia) and a Democrat-controlled House to navigate various […]

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Reviewing the Commitment to American GROWTH Act

Last week, Congressman Kevin Brady (R-TX) and U.S. House Minority Leader Kevin McCarthy (R-CA) introduced H.R. 11, the Commitment to American GROWTH Act, outlining an alternative to Democratic presidential nominee Joe Biden’s tax vision. The proposal would address upcoming expirations of the 2017 Tax Cuts and Jobs Act (TCJA) and create or expand other tax […]

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Designing a Global Minimum Tax with Full Expensing

The work at the Organisation for Economic Co-Operation and Development (OECD) has included plans to propose a global minimum tax. While negotiations are ongoing, it is worth considering a design for the minimum tax that would be neutral toward investment decisions and minimize complexity and compliance costs. Over the summer, a draft of an OECD […]

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President Trump Outlines Second Term Tax Ideas

The Republican National Convention is underway this week and President Trump’s campaign released a second term agenda outlining his policy vision in broad strokes. While light on detail, the agenda includes a few tax policy items like expanding existing tax breaks, creating credits for specific industries and activities, and unspecified tax cuts for individuals. The […]

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How the CARES Act Fixed a Tax Bias Against Green Investment

One under-discussed part of the CARES Act, passed in March to provide economic relief during the COVID-19 epidemic, is a correction to a drafting error in the Tax Cuts and Jobs Act of 2017, often known as the “retail glitch.” The Tax Cuts and Jobs Act provided 100 percent bonus depreciation for many short-lived assets, […]

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Economic Recovery and Deductions for Worker Training

Yesterday, Scott Pulsipher and Michael B. Horn wrote on RealClearPolicy.com, “An obstacle to employers investing more in their employees’ education is that Section 127 of the tax code has been frozen in time since 1986.” Section 127 allows employers to provide up to $5,250 annually for worker education costs that can be tax-deductible and excludable […]

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Inventory Valuation in Europe

As with capital investment, businesses cannot immediately deduct the full cost of inventory purchases against taxable income. Instead, the cost of inventories is deducted when sold. The deduction amount depends on the inventory valuation method. Today’s map shows which of the three inventory valuation methods European OECD countries require their businesses to use for tax […]