Tax Policy

Extracted Attributes

• Nature

  Political and economic issue.

• Definition

  Guidelines and principles established by a government for the imposition and collection of taxes.

• Primary Purpose

  Influencing the country's economy and promoting economic growth.

• Tools for Reform

  Changes to tax rates, definitions of taxable income, creation of new taxes.

• Impacted Entities

  Households, firms, banks, individuals, businesses, entrepreneurs, multinational companies.

• Complexity Outcome

  Often benefits certain groups of taxpayers while shifting more of the burden to others.

• Macroeconomic Aspects

  Overall quantity of taxes to be collected and its impact on economic activity.

• Microeconomic Aspects

  Fairness and efficiency in tax collection.

• US Tax Revenue (2020)

  Approximately 25% of the country's GDP.

Timeline

• Major tax reforms were implemented, aimed at reducing distortion, incentivizing work, simplifying tax codes, closing loopholes, and enhancing global competitiveness. (Source: Web Search)

  1980s

• Peter R. Orszag and William G. Gale discussed 'Bush Administration Tax Policy: Effects on Long-Term Growth'. (Source: Web Search)

  2004-10-18

• William G. Gale and Donald Marron discussed 'The Macro Effects of Camp’s Tax Reform'. (Source: Web Search)

  2014-03-05

• William G. Gale discussed 'Effects of Income Tax Changes on Economic Growth'. (Source: Web Search)

  2014-09-19

• The Tax Cuts and Jobs Act (TCJA) was enacted, significantly shaping tax policy for subsequent years. (Source: Web Search)

  2017

• Total U.S. tax revenue accounted for approximately a quarter of the country’s GDP. (Source: Web Search)

  2020

• The Senate introduced an updated budget resolution providing new guidance on tax and spending policy changes, instructing the Senate Finance Committee to make tax policy changes reducing revenue by up to $1.5 trillion over 10 years. (Source: Web Search)

  2025-04-02

• The 'One Big Beautiful' bill, including tax policy changes such as a more generous SALT deduction cap and inflation indexing adjustments, was amended and passed out of the House of Representatives. (Source: Web Search)

  2025-05-22

• Expiring provisions of the TCJA (Tax Cuts and Jobs Act) are projected to produce a substantial tax hike across the US if not addressed. (Source: Web Search)

  2026

Tax policy

Tax policy refers to the guidelines and principles established by a government for the imposition and collection of taxes. It encompasses both microeconomic and macroeconomic aspects. The former focuses on issues of fairness and efficiency in tax collection, and the latter focuses on the overall quantity of taxes to be collected and its impact on economic activity. The tax framework of a country is considered a crucial instrument for influencing the country's economy. Tax policies have significant implications for specific groups within an economy, such as households, firms, and banks. These policies are often intended to promote economic growth; however, there is significant debate among economists about the most effective ways to achieve this. Taxation is both a political and economic issue. Political leaders often use tax policies to advance their agendas through various tax reforms, such as changes to tax rates, definitions of taxable income, and the creation of new taxes. Specific groups, such as small business owners, farmers, and retired individuals, can often exert political pressure to reduce their share of the tax burden. The tax code is often complex and includes rules that benefit certain groups of taxpayers while shifting more of the burden to others.

Web Search Results

• How Do Tax Policies Affect Individuals and Businesses?

  This policy brief reviews how tax policies impact individuals and businesses, using some examples from major tax reforms in the last several decades. Taxation affects individual and family decisions on work, savings, and their choice of residence. In addition, tax policies influence how entrepreneurs organize their companies and optimize investment and borrowing activities. Moreover, tax codes affect the global competitiveness of the U.S. in attracting and keeping multinational companies. As [...] Tax policies affect economic decision-making on work, savings, inter-state migration, investment, and business organization. Major tax reforms since the 1980s aimed at reducing distortion, incentivizing work, simplifying the tax codes, closing loopholes, and enhancing the global competitiveness of American corporations. The effectiveness of tax reforms depends on the overall economy and may not always conform with economic model predictions. [...] In 2020, the total U.S. tax revenue accounted for about a quarter of the country’s GDP 1. Tax policies affect the type and amount of income subject to taxation and the rate at which it is taxed. Changes in the tax codes influence the decisions people make about whether and how much to work, how much to save for retirement, and where to live. Taxation also affects how entrepreneurs organize their businesses, how much to borrow and invest, and where they locate the businesses they create.

• Budget Reconciliation: Tracking the 2025 Trump Tax Cuts

  May 22, 2025: The “One Big Beautiful” bill was amended before being passed out of the House of Representatives. Tax policy changes include a more generous SALT deduction cap, changes to inflation indexingInflation indexing refers to automatic cost-of-living adjustments built into tax provisions to keep pace with inflation. Absent these adjustments, income taxes are subject to “bracket creep” and stealth increases on taxpayers, while excise taxes are vulnerable to erosion as taxes expressed in [...] April 2, 2025, the Senate introduced an updated budget resolution to provide new guidance to its committees on tax and spending policy changes. It adopts the instructions in the House resolution for the House committees while instructing the Senate Finance Committee to make tax policy changes that reduce revenue by up to $1.5 trillion over 10 years against a current policy baseline, which assumes an additional $3.8 trillion in tax cuts. While the $3.8 trillion would not officially score as a [...] Policymakers should have two priorities in the upcoming economic policy debates: a larger economy and fiscal responsibility. Principled, pro-growth tax policy can help accomplish both. 21 min read Data ### Expiring TCJA Tax Provisions in 2026 Would Produce Substantial Tax Hike across the US

• Effects of Income Tax Changes on Economic Growth

  A fair assessment would conclude that well-designed tax policies have the potential to raise economic growth, but there are many stumbling blocks along the way and certainly no guarantee that all tax changes will improve economic performance. Given the various channels through which tax policy affects growth, a tax change will be more growth-inducing to the extent that it involves (i) large positive incentive (substitution) effects that encourage work, saving, and investment; (ii) small or [...] We find that, while there is no doubt that tax policy can influence economic choices, it is by no means obvious, on an ex ante basis, that tax rate cuts will ultimately lead to a larger economy in the long run. While rate cuts would raise the after-tax return to working, saving, and investing, they would also raise the after-tax income people receive from their current level of activities, which lessens their need to work, save, and invest. The first effect normally raises economic activity [...] U.S. Economy Income Tax Changes and Economic Growth William G. Gale September 19, 2014 Bush Administration Tax Policy: Effects on Long-Term Growth U.S. Economy Bush Administration Tax Policy: Effects on Long-Term Growth Peter R. Orszag, William G. Gale October 18, 2004 The Macro Effects of Camp’s Tax Reform U.S. Economy The Macro Effects of Camp’s Tax Reform William G. Gale, Donald Marron March 5, 2014 Related Books Reforming Occupational Licensing in the US

• Whose Tax Plan Are We Under in 2025? - SmartAsset

  The current tax code reflects a blend of legislative decisions shaped over more than a decade, with another round of potential changes on the horizon. While the TCJA continues to define tax policy in 2025, lawmakers are already proposing new provisions that could reshape deductions, credits and income thresholds in the coming years. These shifts offer a preview of how future tax burdens may be distributed across income levels, depending on what version of the proposals becomes law.

• 2025 Tax Policy Outlook: A year for action - PwC

  With the passage of the One Big Beautiful Bill Act (OBBBA), organizations are entering a new era of tax policy. The legislation not only reshapes compliance and reporting requirements but also redefines how businesses approach long-term strategy, balancing potential risks with emerging opportunities. Act today on what matters most. ## Tax policy and technical areas to keep an eye on [...] Careers Entry Level Careers Menu Careers Experienced Careers Menu Careers University Relations Featured Shared success benefits Loading Results No Match Found # Tax policy, legislation and regulations Turn tax policy insights into action ## Transform your business strategy in the OBBBA landscape [...] A key challenge for business leaders this year is to engage with policymakers and build public support for tax and trade policies that promote economic growth, business investment and job creation. Explore our dynamic list of priority areas below. Tariffs and trade Corporate alternative minimum tax (CAMT) Sustainability and energy transition Pillar Two Prevailing wage and apprenticeship Tax technical insights