The Deduction

President Biden recently released his budget proposal for fiscal year 2024. As he has with previous budgets, the president is continuing to call for higher taxes on businesses and wealthy taxpayers.This may be the last budget President Biden releases before he announces a run for a second term. The White House says this budget will reduce the deficit, strengthen Medicare, and will only target the well-off.But are those claims true? Erica York, senior economist, walks through the details with Jesse. They discuss what the economic impact of this budget would be and what parts stand a chance at actually becoming law.Links:https://taxfoundation.org/biden-budget-tax-proposals-analysishttps://taxfoundation.org/biden-budget-taxes/https://taxfoundation.org/biden-tax-fairness/https://taxfoundation.org/growth-opportunity-us-tax-reform-plan/Follow us!:https://twitter.com/TaxFoundationhttps://twitter.com/deductionpodhttps://twitter.com/ericadyorkhttps://twitter.com/solisjesseSupport the showSupport the show

Affordable housing is an issue that has had long-standing bipartisan interest in D.C. But the path to increase the supply of affordable housing, though often well-intentioned, has created a bureaucratic nightmare.Large programs like the Low-Income Housing Tax Credit, and other initiatives like rehabilitation tax credits and grants, have created a web of complexity that makes these policies less helpful than they were meant to be.Garrett Watson, senior policy analyst, joins Jesse to break down the tax code’s relationship to affordable housing. He also discusses his testimony to the U.S. Senate about this topic, and where he thinks lawmakers should focus their efforts as they continue to debate these tax programs.Links:https://taxfoundation.org/expanding-affordable-housing/https://www.finance.senate.gov/hearings/tax-policys-role-in-increasing-affordable-housing-supply-for-working-familieshttps://taxfoundation.org/low-income-housing-tax-credit-lihtc/Follow us!https://twitter.com/deductionpodhttps://twitter.com/TaxFoundationhttps://twitter.com/GS_Watsonhttps://twitter.com/solisjesseSupport the show

Filing season is ramping up, as most of us are getting ready to file our state and federal income taxes.But in nearly a third of U.S. states, taxpayers pay some sort of local income tax too. Levied in thousands of cities, counties, school districts, and other localities, local income taxes are often used to either lower other taxes (like property taxes) or raise more revenue for local services.While they may make sense on paper, local income taxes come with more challenges than other local revenue sources. Janelle Fritts, policy analyst with Tax Foundation's Center for State Tax Policy, walks Jesse through the origin of local income taxes and the trade-offs lawmakers need to keep in mind when considering them.Links:https://taxfoundation.org/local-income-taxes-2023Support the show

On Tuesday, President Biden shared his policy aspirations during the State of the Union address. The commander in chief outlined three tax proposals in his remarks: quadrupling the brand-new excise tax on stock buybacks, instituting a “billionaire minimum tax,” and extending the now-lapsed expanded Child Tax Credit.Erica York and Alex Muresianu from the federal tax policy team joined Jesse to give a run-down of Tuesday night’s events. They discuss the prospects of major tax changes becoming law in a divided government and what these proposals signal about how President Biden thinks about tax policy as he enters the latter half of his first term.Links:https://taxfoundation.org/biden-state-of-the-union-tax-proposals/https://taxfoundation.org/inflation-reduction-act-stock-buybacks/https://taxfoundation.org/biden-billionaire-tax-unrealized-capital-gains/https://taxfoundation.org/child-tax-credit-reform/https://taxfoundation.org/biden-administration-tax-proposals/https://www.wsj.com/articles/why-does-the-u-s-tax-code-penalize-r-d-big-tech-innov[…]acturing-production-growth-inflation-silicon-valley-11674415751Support the show

Since 2021, 43 states have provided substantial tax relief for taxpayers and businesses. But this year, a new trend has emerged in the opposite direction: a push for states to tax investment.From coordinated wealth tax proposals to higher capital gains income taxes, some state legislatures are going after high earners.Jared Walczak, V.P. of State Projects at the Tax Foundation, joins Jesse to discuss how these measures would affect investment, job creation, and migration between states—and why they’re happening now.Links:https://taxfoundation.org/state-wealth-tax-proposals/https://taxfoundation.org/state-population-change-2022/https://taxfoundation.org/2023-state-tax-changes/Support the show

It’s a new year. And if one thing is certain, it’s that businesses are facing a lot of uncertainty.Key parts of the Inflation Reduction Act of 2022 are kicking into effect, including the new book minimum tax.Erica York, senior economist at the Tax Foundation, joins Jesse to discuss why this policy came into the fold. They discuss if this tax will really stop companies from paying zero in taxes, as the president claims, if the new Republican House will revisit this debate, and what the tax's impact will be on jobs and economic growth.Links:https://taxfoundation.org/book-minimum-tax-analysis/https://twitter.com/ericadyork/status/1610328115393216512https://taxfoundation.org/federal-tax-lame-duck-2022-midterms/https://taxfoundation.org/warren-corporate-book-tax/https://taxfoundation.org/companies-paying-no-income-taxes/https://open.spotify.com/episode/2b6jGfzvyEbFYicob0YuHn?si=ae929bfae71042bbSupport the show

When it comes to international economic competition, people often frame the argument as the U.S. versus China.But across the Atlantic, nation-states in the European Union have been working hard to show the world that they deserve to be considered an economic force.Rising up to this challenge for the EU is easier said than done. Sean Bray, EU policy analyst at the Tax Foundation, joins Jesse to talk through the EU's challenges--and potential--when it comes to tax and economic policy.Support the show

Tax Foundation recently announced that Daniel Bunn is our new president and CEO. In this special episode of The Deduction¸ Daniel chats with Jesse about how he got into tax policy. They discuss his time in the Senate, his plans for Tax Foundation’s future, and even his obsession with smoking meats.Links:https://taxfoundation.org/staff/daniel-bunn/ https://twitter.com/danieldbunnhttps://www.linkedin.com/in/danielbunnSupport the show

The 2022 midterm elections are wrapping up, and taxpayers are looking at a divided Congress for the next two years. Senior Policy Analyst Garrett Watson sits down with Jesse at Tax Foundation's headquarters to give a quick analysis of what these elections mean for tax policy. They talk through what we can expect from the approaching "lame-duck" session, what a Republican House and Democrat Senate could find agreement on, and what priorities the upcoming Congress should focus on.Links:https://taxfoundation.org/tax-extenders-2022/ https://taxfoundation.org/tax-cuts-jobs-act-business-tax-increases/Support the show

If you’ve been following taxes closely these past few months, you know that the UK is currently undergoing a drastic change.This episode of The Deduction is part one in our ongoing coverage of the UK’s tax battles. Jesse chats with Tom Clougherty, research director and head of tax at the Centre for Policy Studies in London. Tom talks us through what all went down in the UK this fall: from the leadership elections to the countless U-turns the new prime minister has made to try and reform the country’s tax code.Shortly after we finished recording this episode, news broke that Chancellor Kwasi Kwatern was being ousted, and Jeremy Hunt would take over the Exchequer, with the promise that, yet again, another U-turn would happen on the country’s budget.While this episode doesn’t get into that turn of events, it is still a very informative start showing how we got here and where the country should go on taxes.A quick British glossary for this episode—“Bugbear”: a cause of obsessive fear, irritation, or loathing.Links:https://www.taxfoundation.org/mailbaghttps://cps.org.uk/our-team/tom-clougherty/https://taxfoundation.org/uk-capital-allowances-super-deduction/https://taxfoundation.org/2022-international-tax-competitiveness-index/Support the show

From the Tax Cuts and Jobs Act in 2017 to the Inflation Reduction Act signed into law just this summer, lawmakers across the political spectrum are often tempted to implement temporary tax reforms.But is this how tax policy should be done?Garrett Watson joins Jesse to discuss the pros and cons of writing tax laws that have an end date and why we find ourselves having a debate at the end of each year about so many temporary provisions.Links:https://taxfoundation.org/making-the-tax-cuts-and-jobs-act-individual-income-tax-provisions-permanent/https://taxfoundation.org/economic-growth-opportunity-tax-reforms/https://taxfoundation.org/temporary-tax-policies-in-budget-reconciliation/https://taxfoundation.org/cbo-report-us-gdp-budget-deficit/https://taxfoundation.org/tax-extenders-expiring-tax-provisions-2021/Support the show

Maine has blueberry taxes. Alabama has mosquito taxes. Each state and county has its tax quirks. But when state and local governments want to raise revenues, there are four key taxes they turn to. Depending on where you live, the differences in these taxes between states can be significant. Katherine Loughead, senior policy analyst at the Tax Foundation, joins Jesse Solis to discuss trends we are currently seeing in state and local taxes and to break down how stable these revenue sources are for the places we call home.Links: https://taxfoundation.org/state-local-tax-collections/https://taxfoundation.org/mailbagSupport the show

The Inflation Reduction Act, signed into law recently by President Biden, includes a book minimum tax, which is raising the eyebrows of accountants everywhere.This new policy–a 15 percent tax applied to the financial statement income that companies report to their investors–is one of the law’s largest revenue raisers and joins plenty of other “minimum” taxes for multinational corporations, including GILTI and the OECD global minimum tax.Scott Dyreng, a professor of accounting at Duke University, and Daniel Bunn, executive vice president at the Tax Foundation, join Jesse to discuss how these minimum taxes work and, more importantly, how the accounting will work as companies aim to comply with all these new complex rules and tax increases.Links:https://taxfoundation.org/inflation-reduction-act/https://taxfoundation.org/book-minimum-tax-analysis/https://taxfoundation.org/inflation-reduction-act-minimum-tax/https://taxfoundation.org/inflation-reduction-act-accelerated-depreciation/Support the show

The Internal Revenue Service (IRS) finds itself under fire often. Outdated technology, millions of unanswered calls, and cafeterias full of paper returns--it's clear that America’s tax collector needs improvement.In the same way that technology has helped shape the tax policy debate, tech also has a role to play in advancing tax administration.Jesse is joined by Courtney Kay-Decker and Jared Ballew, chair and vice chair (respectively) of the Electronic Tax Administration Advisory Committee (ETAAC). They discuss ETAAC's annual report that lays out what the IRS is doing right, and what it's doing wrong, as the agency continues to see its duties grow. They also discuss the IRS funding in the Inflation Reduction Act, and define what steps the agency and Congress should take in order to truly keep the IRS focused on serving taxpayers.Links:https://www.irs.gov/tax-professionals/electronic-tax-administration-advisory-committee-etaachttps://www.irs.gov/pub/irs-pdf/p3415.pdfhttps://taxfoundation.org/inflation-reduction-act/https://taxfoundation.org/tax-season-reform/https://taxfoundation.org/inflation-reduction-act-irs-funding/https://taxfoundation.org/tax-gap/Support the show

The House of Representatives is set to pass the Inflation Reduction Act, the latest iteration of President Biden’s tax and climate agenda.The road to get to this final package has been anything but easy--with congressional Democrats drastically scaling back the initial $3 trillion Build Back Better agenda.Garrett Watson joins Jesse to discuss what sacrifices were made by key lawmakers to bring this bill to the finish line. They also look at what the economic impact of this proposal would be as the country continues to face historic rates of inflation.Links:https://taxfoundation.org/inflation-reduction-act/https://taxfoundation.org/tax-on-stock-buybacks/https://taxfoundation.org/inflation-reduction-act-accelerated-depreciation/https://taxfoundation.org/inflation-reduction-act-corporate-taxes/https://taxfoundation.org/book-minimum-tax-analysis/Support the show

After months of stalled negotiations, Sen. Joe Manchin (D-WV) announced that he has reached a deal with Senate Democrat leadership on a reconciliation package.Called the Inflation Reduction Act, the legislation would raise taxes on corporations and top earners with the goal of funding a number of programs to reduce carbon emissions, address prescription drug costs, and spur the economy.Garrett Watson joins Jesse Solis to talk through what these tax changes would mean for the economy: Will they reduce inflation, and do they break the President's pledge not to raise taxes on those earning less than $400,000?Links:https://taxfoundation.org/biden-corporate-minimum-book-tax/https://taxfoundation.org/prescription-drug-pricing-reform/https://taxfoundation.org/tax-gap/https://taxfoundation.org/tax-reform-options/?option=28Support the show

Technology is moving rapidly--especially when it comes to taxes. With advancements in AI and machine learning, we are seeing technology being utilized in every corner of the tax world.From policy to filing, from accounting to compliance: technology is truly shaping the future of taxes. Jesse chats with Ben Alarie, CEO of Blue J, and Garrett Watson, Senior Policy Analyst at the Tax Foundation, about how companies are utilizing technology to comply with new innovations in the tax code and how policymakers can use technology to advance tax laws that support an ever-evolving economy.Links: https://www.bluej.com/https://taxfoundation.org/overview-tax-foundations-taxes-growth-model/ Support the show

On July 1st, 2021, over 130 countries agreed to a sweeping overhaul of the global tax system.This agreement -- on a 15% global minimum tax -- was unprecedented, taking on over a century of how international tax competition has been done.One year later, the deal appears stuck. Countries are moving ahead with caution before codifying this new tax into their laws.Daniel Bunn, Tax Foundation's executive vice president, joins Jesse to discuss what this delay means for countries and multinational corporations, and what the path ahead looks like for global tax policy and competition.Intro: 00:02Overview: 01:15Myths and Misconceptions: 12:54Key Takeaways: 15:45Outro: 17:50Links: https://taxfoundation.org/global-minimum-tax-us-international-tax/Support the show

Oil prices have skyrocketed, posing a new risk to the post-pandemic recovery. Feeling the pressure to respond, policymakers have proposed everything from gas tax holidays, tapping into strategic reserves, and even rebate cards. One idea that has crawled back from the dead: “Windfall Profits Taxes.”This idea is seemingly simple: legislation targeted at the “excess” profits of oil companies. However, as with anything in tax policy, the reality is much more complicated.But why exactly have windfall profits taxes risen from the grave, and what put them there in the first place? Host Jesse Solis sits down with Tax Foundation policy analyst Alex Muresianu to find out more.Links: https://taxfoundation.org/windfall-profits-tax-oil-company-profits/Support the show

Amidst soaring inflation, policymakers across the political spectrum proposed many ideas to soften the blow of higher prices—especially for low-income workers and families.One idea that caught on quickly: sales tax relief on groceries.The idea had its merits, but Tax Foundation research shows that it may have missed the mark. Tax Foundation Vice President of State Projects Jared Walczak joins Jesse Solis to discuss how grocery sales tax relief became a popular idea, and why it is so hard to nail down progressive vs. regressive tax policy.Links: https://taxfoundation.org/sales-tax-grocery-tax-exemptions/Support the show