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Net Operating Loss Provisions: State Treatment and the Economic Benefits

Key Findings Well-designed Net Operating Loss (NOL) provisions benefit the economy by smoothing business income, which mitigates entrepreneurial risk and helps firms survive economic downturns. Forgoing tax revenue in the short term affords businesses the opportunity to prioritize human and physical capital investment. Start-ups and industries with profits highly correlated to the business cycle are […]

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Americans Moved to Low-Tax States in 2021

Americans were on the move in 2021, and they chose low-tax states over high-tax ones. That’s the finding of recent U.S. Census Bureau population data, along with commercial datasets released this week by U-Haul and United Van Lines. Nationally, the U.S. population only grew by 0.1 percent between July 2020 and July 2021, the lowest […]

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U.S. Fiscal Response to COVID-19 Among Largest of Industrialized Countries

As the Omicron variant continues to sweep through the world, it is possible there will be renewed talks of fiscal support if economic growth declines. For this reason, it is worth reviewing how various countries responded to the pandemic over the past two years. One thing stands out: The U.S. fiscal response was among the […]

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Permanent Build Back Better Act Would Likely Require Large Tax Increases on the Middle Class

The Congressional Budget Office (CBO) has given us a sobering look into our fiscal future under the Build Back Better Act (BBBA), estimating that if all the bill’s policies were made permanent, $3 trillion would be added to the national debt over the next 10 years. This is on top of more than $7 trillion […]

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Patching Spain’s Tax Code Won’t Attract Investors

Three years after its initial announcement, Spain’s government has given a green light to the “start-up law” and sent it to parliament. The bill that could be approved by mid-2022 is part of the reform package that Spain and the European Commission agreed upon in order for Spain to receive the European Union recovery funds. […]

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Tax Policy’s Bipartisan Roots

The following blog post was adapted from a speech given by Mr. Graetz at the Tax Foundation’s 2021 “Tax Prom,” where Mr. Graetz was awarded the Distinguished Service Award. I always begin my classes in Federal Income Taxation by reminding my students that the tax law is the primary link between people and their government—they […]

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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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New Study Shows Tax Policy Has Strong Effects on Innovation

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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Testimony: Joint Economic Committee Hearing on the Revenue Provisions of the Build Back Better Act

Note: The following is the testimony of Dr. William McBride, Tax Foundation Vice President of Federal Tax and Economic Policy, prepared for a Joint Economic Committee hearing on October 6, 2021, titled, “Building Back Better: Raising Revenue to Invest in Shared Prosperity.” Chairman Beyer, Ranking Member Lee, and members of the Joint Economic Committee, thank you for […]

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Placing the House Build Back Better Act Tax Increases in Historical Context

One way to put the House Build Back Better Act’s tax increases in historical context is to compare them to previous tax increases as a share of gross domestic product (GDP). Compared to previous tax changes, this House tax plan would impose the largest gross tax increase since President Lyndon Johnson’s tax hike to help […]