The Deduction

The Inflation Reduction Act is an ambitious law with worthy goals to reduce deficits, fight inflation, help the IRS, and combat climate change. However, one year after its enactment, there are concerns about its overall fiscal impact, the additional complexity it introduces to the tax system, and the sustainability of its initiatives.

 Will McBride, Vice President of Federal Tax Policy at the Tax Foundation, joins Kyle Hulehan to examine the Inflation Reduction Act one year later. They dive into the disconnect between political aspirations and the real-world consequences of executing intricate policies, the skyrocketing costs of green energy tax credits, and why, despite increased funding, the IRS is struggling to keep up.

Links:

https://taxfoundation.org/research/all/federal/inflation-reduction-act-taxes/

 https://taxfoundation.org/taxedu/podcast/all/accounting-for-the-new-book-minimum-tax/

 https://taxfoundation.org/blog/inflation-reduction-act-green-energy-tax-credits/

 https://taxfoundation.org/research/all/federal/inflation-reduction-act/

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Interest rates and tax policy, two vital components of our economic landscape, often interact in fascinating ways. They influence the behavior of individuals, businesses, and governments. But how exactly? 

Alan Cole, Senior Economist at the Tax Foundation, joins us to explore the complex effects of interest rate changes. We discuss how these shifts can impact everything, from budget deficits and tax revenues to investment choices and the overall economy.

 Links:
https://taxfoundation.org/tax-reform-bill-interest-rates/
https://taxfoundation.org/deficit-interest-rates-and-growth/
https://taxfoundation.org/tax-basics/cost-recovery/

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It’s the 5th anniversary of the groundbreaking Wayfair Supreme Court decision—a ruling that marked a new era of sales tax collection and changed how we think about taxation in the digital age.

South Dakota v. Wayfair established a new precedent, allowing states to assert their authority in collecting sales tax from remote sellers based on economic presence.

Jared Walczak, Vice President of State Projects, joins Kyle to provide insights into the evolving legal framework surrounding the Wayfair decision and sales tax collection. They discuss potential solutions that could simplify compliance and bring uniformity to online sales tax regulations.

Links:
https://taxfoundation.org/what-does-the-wayfair-decision-really-mean-for-states-businesses-and-consumers/https://www.supremecourt.gov/opinions/17pdf/17-494_j4el.pdf

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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.

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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/

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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/

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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#Stability
https://taxfoundation.org/taxedu-video-cannabis/
https://taxfoundation.org/taxedu-video-carbon-tax-explained/

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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/

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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-analysis
https://taxfoundation.org/biden-budget-taxes/
https://taxfoundation.org/biden-tax-fairness/
https://taxfoundation.org/growth-opportunity-us-tax-reform-plan/

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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-families
https://taxfoundation.org/low-income-housing-tax-credit-lihtc/

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