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The Tax Cuts and Jobs Act introduced a 20 percent deduction for qualified business income to maintain rough "parity" between pass-through businesses and C corporations. However, the deduction fails to ensure parity and exacerbates existing distortions. Given the deduction's impending expiration, lawmakers have an opportunity to consider alternatives--one of which is corporate integration, a set of policies designed to standardize business taxation. This report evaluates how integration affects parity by analyzing three model proposals: a comprehensive business income tax, a credit imputation system, and a shareholder allocation system., The 2017 Tax Cuts and Jobs Act (TCJA) introduced Section 199A, a 20 percent deduction for qualified business income. The deduction aimed to provide a targeted tax cut for "pass-through" [...]

The Tax Cuts and Jobs Act (TCJA) of 2017 included some of the most far-reaching changes to the US income tax code in a generation. In addition to reducing statutory [...]

Updated September 26, 2024 The Tax Cuts and Jobs Act (P.L. 115-97), enacted in December 2017, included provisions establishing an oil and gas program in the Arctic National Wildlife Refuge [...]

The 2017 Tax Cuts and Jobs Act (TCJA) contained reforms geared toward increasing economic growth and making the tax code simpler, more efficient, competitive, and neutral. However, many key provisions were temporary, and some provisions were not ideal. Instead of simply extending the TCJA, lawmakers should make further pro-growth and fiscally responsible reforms while improving the tax code's stability and neutrality. This report proposes two options to extend the TCJA. The first option extends most features of the TCJA's individual and business provisions while making incremental reforms to the tax code. It would improve on the TCJA by reducing the cost of capital and mitigating distortions and complexities while maintaining revenue neutrality. The second option is more aggressive and builds on the structure of the TCJA by enacting significant pro-growth reforms. It would reduce tax rates for individuals, broaden the tax base, and replace business taxation with a tax on business cash flow. The report estimates the impact of each option on federal revenues, the distribution of the tax burden, incentives, and long-run economic output., In 2017, Republican lawmakers passed the Tax Cuts and Jobs Act (TCJA). This law made significant reforms to improve the structure of individual and corporate income taxes while delivering sizable [...]

SUMMARY R48153 August 13, 2024 P.L. 115-97, commonly referred to as the Tax Cuts and Jobs Act (TCJA), made significant changes impacting taxes on new investment. Some provisions enacted by [...]

In 2017, lawmakers passed the Tax Cuts and Jobs Act (TCJA), the most significant overhaul of US tax law since 1986. Among its many changes, the TCJA raised the standard [...]

In 2017, the Tax Cuts and Jobs Act included a new deduction for business income: Section 199A. This provision allows taxpayers to deduct up to 20 percent of qualifying business income against their taxable income and provides a special tax benefit for 'pass-through' businesses--those not subject to the corporate income tax. Supporters of the deduction argue it is necessary to maintain 'tax parity' with corporations and that, without the deduction, pass-through businesses would be at a competitive disadvantage. Opponents argue that parity is not well-defined and that the deduction is unnecessary, complex, and non-neutral. This report compares the tax burden of passthrough businesses and corporations using three measures of effective tax rates: the effective statutory tax rate, the marginal effective tax rate, and the average effective tax rate. Each measure captures different aspects of a business's tax burden and how the tax code influences behavior. This report also evaluates how select changes to the tax code would affect the relative tax burden on business income and investment., In 2017, the Tax Cuts and Jobs Act (TCJA) included a new deduction for business income: Section 199A. This provision allows taxpayers to deduct up to 20 percent of qualifying [...]

The Tax Cuts and Jobs Act (TCJA) was a far-reaching set of changes to the US tax code. Best known for reducing top marginal income and corporate tax rates, it [...]

Updated February 10, 2023 Contents Overview of the Section 199A Deduction Who Qualifies for the Deduction? What Is a Specified Service Trade or Business? What Income Qualifies for the Deduction? [...]

Updated December 21, 2022 Contents Introduction Tax Benefits Versus Traditional Student Aid Brief Historical Perspective of Tax Benefits Summary and Cost of Current Benefits Tables Table 1. Overview of Education [...]

September 23, 2022 Contents The Concept of Tax Extenders Evaluating Expiring Tax Provisions Reasons for Temporary Tax Provisions Extenders as Tax Benefits Tax Provisions that Expired in 2021 Previous Tax [...]

Updated August 10, 2022 The Build Back Better Act (H.R. 5376), as reported by the Committee on the Budget, includes a provision to impose a 1% excise tax on stock [...]

March 11, 2022 Companies are allowed to deduct the ordinary and necessary expenses they pay or incur in determining their taxable income. Under Section 162(a) of the federal tax code, [...]

November 8, 2021 The tax law passed by Congress in 2017 (P.L. 115-97; also known as the Tax Cuts and Jobs Act or TCJA) made significant changes in the taxation [...]

This paper investigates how the Tax Cuts and Jobs Act affects household charitable giving in the United States. We find that the law will reduce charitable giving by $17.2 billion (4.0 percent) in 2018 according to a static model and $16.3 billion assuming a modest boost to growth. Four-fifths of this decline is driven by an increase in the number of taxpayers who claim the standard deduction. We also investigate two policy options that could boost total giving above previous levels: an above-the-line deduction and a tax credit., June 2018 For over a century, the US tax code has incentivized charitable giving by allowing individual taxpayers who chose to itemize to deduct their charitable gifts. With the enactment [...]

This paper analyses the impact of two new international tax provisions, GILTI and FDII, passed under the Tax Cuts and Jobs Act, on U.S. multinational corporations' location of new capital. We analyze whether these rules help retain internationally mobile rents within the U.S. tax base and the associated economic activity within the United States. Our analysis suggests that for a wide range of investment profiles (characterized in terms of scale and expected above-normal returns) for intangible capital, a U.S. MNC can do better by locating anew investment in the United States. Keywords: BEPS, FDII, GILTI, international tax, multinational investment, I. Introduction In this paper, we focus on two new provisions addressing the taxation of income from mobile capital, that were passed as part of Public Law 115-97 (popularly known [...]

An important objective of Public Law 115-97, commonly called the Tax Cuts and Jobs Act, was a reduction in the tax burden on investment. We compute marginal effective tax rates under 2017 law and under the Tax Cuts and Jobs Act and find significantly lower marginal effective tax rates under the new law. In addition, the Tax Cuts and Jobs Act narrows disparities in the tax treatment of investment across asset types, organizational form, and type of financing. Finally, we find that the act sharply reduced effective average tax rates as well as marginal effective tax rates., Given its large consequences on the US economy, Public Law 115-97, known as the Tax Cuts and Jobs Act (TCJA), was passed with relatively little discussion of its effects. Indeed, [...]

Updated June 17, 2021 News reports in the late 1990s and early 2000s drew attention to a phenomenon sometimes called corporate 'inversions' or 'expatriations': instances where U.S. firms reorganize their [...]

Updated May 26, 2021 The federal government provides financial assistance to individuals for higher education expenses in two major ways: tax benefits and traditional student aid (loans, grants, and work-study [...]

May 24, 2021 Fifteen temporary business taxprovisions that expired in 2020 were extended or made permanent by the Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted as Division [...]

Updated October 19, 2020 Contents Tax Treatment of NOLs Permanent Law and Temporary CARES Act Revisions Proposed Heroes Act Changes Brief Legislative History An Example The Economics of NOLs Investment, [...]

Updated October 7, 2020 Contents Introduction Tax Benefits Versus Traditional Student Aid Brief Historical Perspective of Tax Benefits Summary and Cost of Current Benefits Tables Table 1. Overview of Education [...]

Updated October 6, 2020 Increased benefits from net operating losses (NOLs) had been discussed as part of the response to the economic effects of the COVID-19 pandemic. The Coronavirus Aid, [...]

August 10, 2020 In determining their taxable income, companies are allowed to deduct all ordinary and necessary expenses they pay or incur in generating gross income. Those expenses can be [...]

Updated July 30, 2020 Contents Background and Analysis Discussion of House and Senate Actions 96th-103rd Congresses 104lh-106lh Congresses 107th Congress 108th Congress FY2004 Reconciliation Comprehensive Energy Legislation 109th Congress Budget [...]

June 10, 2020 Congress made numerous changes to the federal tax code for individuals and corporate and noncorporate businesses in December 2017, as part of P.L. 115-97 (referred to in [...]

Updated June 1, 2020 Thin capitalization rules, broadly, limit the amount of debt that can generate deductible interest for the purpose of calculating taxable income. Limits on the tax deduction [...]

Updated April 23, 2020 The Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) included two general tax benefits for business: net operating losses (NOLs) and interest deductions, which [...]

April 6, 2020 Congress has passed several laws in response to the COVID-19 pandemic, including, most recently, the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136), which--among its [...]

Updated January 16, 2020 The employer credit for paid family and medical leave (Internal Revenue Code [IRC] [section]45S) was enacted as part of the 2017 tax revision (P.L. 115-97) (commonly [...]

Updated March 12, 2019 Contents Introduction U.S. International Tax System Anatomy of an Inversion Substantial Business Presence U.S. Corporation Acquired by a Larger Foreign Corporation A Smaller Foreign Corporation Acquired [...]

May 16, 2018 The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) requires that large employers either provide health coverage to full-time employees or face a potential [...]

Updated February 21, 2018 The Tax Cuts and Jobs Act (P.L. 115-97), enacted in December 2017, included provisions establishing an oil and gas program in the Arctic National Wildlife Refuge [...]

Updated February 9, 2018 Small business owners have long been an influential player in domestic debates over tax policy. This role stems in part from the widely held view that [...]

December 22, 2017 H.R. 1 was passed in both the House and the Senate on December 20, 2017 (before the final version was passed, this bill was called the Tax [...]

December 19, 2017 The Tax Cut and Jobs Act (H.R. 1) was released by the conference committee on December 15, 2017. The bill contains some elements of the House tax [...]