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Publications by Topic
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Corporate, Business Taxation
A Practical Challenge to Stand-Alone Corporate Tax Reform (Article/Tax Facts)
Donald Marron
Leaders in both parties appear to favor revenue-neutral corporate tax reform that would lower today's 35 percent tax rate while slashing corporate tax breaks. Individual tax reform appears much more contentious, so some observers wonder whether Congress might pursue corporate tax reform by itself, separate from any individual reforms. Such reform faces a big practical challenge, however. Many corporate tax breaks also apply to noncorporate businesses, which are taxed under the individual income tax. Efforts to broaden the corporate base could therefore have significant effects on individual income taxes, making it difficult to pursue corporate reform separately.
Published: 05/06/13
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Small Business, Innovation, and Tax Policy: A Review (Research Report)
Samuel Brown , William G. Gale
Small businesses occupy an iconic place in American public policy debates. This paper discusses interactions between the federal tax code, small business, and the economy. We summarize the characteristics of small businesses, identify the tax provisions that most affect small businesses, and review evidence on the impact of tax and other policies on entrepreneurial activity. We also examine evidence suggesting that it is young firms, not small ones, where job growth and innovation tend to occur. Policies that aim to stimulate young and innovative firms are likely to prove different than policies that subsidize small businesses.
Published: 04/08/13
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Top Individual Income Tax Rates: How Does the U.S. Compare? (Article/Tax Facts)
Jim Nunns
Discussions of the effect of taxes on international competitiveness usually focus on corporate income tax rates, but individual income tax rates may also affect a country’s (or state’s) ability to compete for workers.
Published: 04/03/13
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Carbon Taxes as Part of the Fiscal Solution (Research Report)
Samuel Brown , William G. Gale , Fernando Saltiel
The U.S. faces substantial and unsustainable budget deficits, which will require tax increases and spending cuts to resolve. A carbon tax could raise revenues, with several positive effects: it would improve environmental outcomes, increase economic efficiency, and allow the elimination of selected tax subsidies and spending programs. While a carbon tax imposes a larger burden on lower-income households, the opposite applies for many of the other options like scaling back tax expenditures. A long-term deficit reduction package that included a reduction in income tax expenditures as well as a carbon tax and offsetting payments could provide a balanced distributional effect.
Published: 03/12/13
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Carbon Taxes and Corporate Tax Reform (Research Report)
Donald Marron , Eric Toder
The revenues from a carbon tax could help finance lower corporate tax rates, extending business tax preferences, or other corporate tax reforms. Such a tax swap would reduce the environmental risks of carbon emissions and improve the efficiency of America’s corporate tax system. But it would also pose a significant distributional challenge. A carbon tax would fall disproportionately on low-income families, while corporate tax cuts would disproportionately benefit those with high incomes. Policymakers may want to use some revenue to offset those impacts. They may also want to use some carbon revenues for deficit reduction.
Published: 02/11/13
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Taxing Private Equity Funds as Corporate 'Developers' (Commentary)
Steven Rosenthal
Private equity funds manage vast amounts of money: $2.5 trillion in 2010, much more than the $100 billion in 1994. They earn immense profits, largely from selling the stock of acquired and improved companies. This article focuses on the character of the funds' profits. It recommends that the IRS write new regulations to treat the funds' profits as ordinary income in light of the law, Congress's original intent, and tax policy.
Published: 01/28/13
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Tax Provisions in the American Taxpayer Relief Act of 2012 (ATRA) (Research Report)
Jim Nunns , Jeff Rohaly
The fiscal cliff debate culminated in the passage of the American Taxpayer Relief Act of 2012 (ATRA). ATRA makes permanent most of the tax cuts enacted in 2001 and 2003, permanently patches the alternative minimum tax, extends for five years the enhancements to individual income tax credits originally enacted in the 2009 stimulus legislation, and temporarily extends certain other tax provisions. This paper provides a detailed description of the individual, corporate, and estate tax provisions in ATRA.
Published: 01/09/13
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International Competitiveness: Who Competes Against Whom and for What? (Research Report)
Eric Toder
Political leaders and commentators frequently claim that the policies they favor will make the United States more competitive, without defining what competiveness between countries means. This paper defines competitiveness as a contest between nations for scarce and mobile resources and explores how different tax policies may help or hinder efforts to attract high-skilled labor, capital investment, and headquarters of multinational corporations. While these inputs contribute to living standards, elevating competition for them into a final goal of policy instead of a consideration that must be weighed against costs of tax policies that attract them could lead to seriously flawed policies.
Published: 09/19/12
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Corporate Dividends Paid and Received, 2003-2009 (Article/Tax Facts)
Joseph Rosenberg
This article presents IRS data on corporate dividends paid and received. Following the 2003 legislation that lowered the individual tax rate on dividends, roughly $350 billion of net corporate dividends have been paid annually. Less than half that amount has shown up as qualified dividend income on individual tax returns.
Published: 09/17/12
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