The Deduction

On this “not-so-heavy-on-the-policy” episode, our much-beloved host, Jesse Solis, is joined by the Deduction's Senior Producer, Dan Carvajal, and Marketing Associate, Kyle Hulehan, to share some bittersweet news.If you follow us on social media, you've undoubtedly come across something Kyle created. He is no stranger to the Tax Foundation, having interned here in 2018 and rejoining full-time last year, and his ever-brimming curiosity will be a welcome new seat at the table.Support the show

The past few years have brought a renewed push from countries across the globe to combat climate change. In the European Union, policymakers have put a timeline on their climate agenda. By 2050, the EU wants to achieve a net-zero economy.Sean Bray, director of European policy, breaks down how much it would cost to achieve this goal. He also discusses the similarities and differences between the EU’s and the U.S.’s climate plans, and how the EU should use its tax codes to make the transition to a net-zero economy as frictionless as possible.Links:https://taxfoundation.org/eu-green-transition-tax-policy/https://taxfoundation.org/tax-basics/full-expensing/https://taxfoundation.org/cbam-eu-carbon-border-tax/Follow Us!https://twitter.com/TaxFoundationhttps://twitter.com/deductionpodwww.linkedin.com/in/seanpatrickbraySupport the show

The FairTax, on paper, sounds simple: just replace all major sources of the federal government’s revenue—the individual income tax, corporate income tax, estate and gift taxes, and payroll tax—with a national sales tax.But when you pull back the curtains, this proposal leads to more questions than answers.Alan Cole, senior economist, makes his Deduction debut to talk us through why this old idea is gaining attention this year. He breaks down what the FairTax shows us about the debate between income taxes versus consumption taxes, and why “simple solutions” appeal to so many policymakers for how best to tax an increasingly complex economy.Links:https://taxfoundation.org/fair-tax-national-sales-tax/https://taxfoundation.org/fairtax-consumption-taxes/https://taxfoundation.org/tax-basics/value-added-tax-vat/Follow us!https://twitter.com/TaxFoundationhttps://twitter.com/deductionpodhttps://twitter.com/AlanMColehttps://twitter.com/solisjesse Support the show

The tax base around the world is shrinking for traditional excise taxes, including taxes on tobacco, alcohol, and motor fuel. But newer excise taxes on things like carbon, cannabis, and ride-sharing are on the rise.This trend has the potential to significantly affect the global economy.Adam Hoffer, Director of Excise Tax Policy, joins Jesse to discuss how excise taxes have been used by policymakers in the past and how that is changing. They discuss what makes a good design for these taxes and where excise taxes may go in the future as the traditional “sin tax” base continues to shrink.Links:https://taxfoundation.org/global-excise-tax-policy-application-trends/https://taxfoundation.org/unlock-global-growth-role-of-taxation/https://taxfoundation.org/principles#Stabilityhttps://taxfoundation.org/taxedu-video-cannabis/https://taxfoundation.org/taxedu-video-carbon-tax-explained/Follow us!https://twitter.com/AdamJHofferhttps://twitter.com/TaxFoundationhttps://twitter.com/deductionpodhttps://twitter.com/solisjesseSupport the show

When we discuss tax policy, the conversation inevitably turns to who pays, who should pay, and how much they should pay.Unfortunately, the tax burdens debate is often missing a key point: how income transfer programs—like Social Security or Medicaid—affect households’ tax burdens.When looking at the whole picture, just how progressive is our tax code? Timothy Vermeer, senior policy analyst, joins Jesse to take a closer look. They discuss what is missing from the progressivity debate, and what lawmakers at the state and federal level should keep in mind when they consider tax reforms and interstate competition.Links:https://taxfoundation.org/who-pays-taxes-federal-state-local-tax-burden-transfers/https://taxfoundation.org/question-1-massachusetts-millionaires-tax/Follow us!https://twitter.com/TaxFoundationhttps://twitter.com/deductionpodhttps://twitter.com/tevermeerhttps://twitter.com/solisjesseSupport the showSupport the show

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