Next Steps in Tax Reform
The GOP tax reform, now adopted as the 2017 Tax Cuts and Jobs Act, was intended to cut business taxes to stimulate investment, lower some personal taxes, eliminate deductions and tax credits to help pay for the tax reductions, and move the U.S. toward a territorial tax system and reduce the shifting...
| Main Authors: | , , |
|---|---|
| Format: | Working Paper |
| Language: | en_US |
| Published: |
MIT Joint Program on the Science and Policy of Global Change
2019
|
| Online Access: | https://hdl.handle.net/1721.1/121476 |
| _version_ | 1811089558222143488 |
|---|---|
| author | Jacoby, Henry D Montgomery, David Yuan, Mei |
| author_facet | Jacoby, Henry D Montgomery, David Yuan, Mei |
| author_sort | Jacoby, Henry D |
| collection | MIT |
| description | The GOP tax reform, now adopted as the 2017 Tax Cuts and Jobs Act, was intended to cut business taxes to stimulate investment, lower some personal taxes, eliminate deductions and tax credits to help pay for the tax reductions, and move the U.S. toward a territorial tax system and reduce the shifting of profits abroad by U.S. companies. Some of these objectives have been achieved, but at the cost of perverse incentives and distributional effects, and the threat of a substantial contribution to the fiscal deficit. As a result, corrections are going to be required in future years. Many of the Act’s undesirable features are attributable to the inability of its drafters to come up with sufficient revenue to compensate for the tax reductions. A CO2 tax is explored, as perhaps the only measure that is consistent with the declared principles of the GOP leadership and likely to draw Democratic support, and large enough to make up for the Act’s revenue-losing provisions. We summarize the process that led to the Act and its major failures. Then, applying the MIT U.S. Regional Energy Policy (USREP) model, we show how, when the Act is opened up for repairs, a CO2 tax could help correct its flaws while serving environmental goals. |
| first_indexed | 2024-09-23T14:21:06Z |
| format | Working Paper |
| id | mit-1721.1/121476 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T14:21:06Z |
| publishDate | 2019 |
| publisher | MIT Joint Program on the Science and Policy of Global Change |
| record_format | dspace |
| spelling | mit-1721.1/1214762019-07-02T03:04:33Z Next Steps in Tax Reform Jacoby, Henry D Montgomery, David Yuan, Mei The GOP tax reform, now adopted as the 2017 Tax Cuts and Jobs Act, was intended to cut business taxes to stimulate investment, lower some personal taxes, eliminate deductions and tax credits to help pay for the tax reductions, and move the U.S. toward a territorial tax system and reduce the shifting of profits abroad by U.S. companies. Some of these objectives have been achieved, but at the cost of perverse incentives and distributional effects, and the threat of a substantial contribution to the fiscal deficit. As a result, corrections are going to be required in future years. Many of the Act’s undesirable features are attributable to the inability of its drafters to come up with sufficient revenue to compensate for the tax reductions. A CO2 tax is explored, as perhaps the only measure that is consistent with the declared principles of the GOP leadership and likely to draw Democratic support, and large enough to make up for the Act’s revenue-losing provisions. We summarize the process that led to the Act and its major failures. Then, applying the MIT U.S. Regional Energy Policy (USREP) model, we show how, when the Act is opened up for repairs, a CO2 tax could help correct its flaws while serving environmental goals. This work was supported by the government, industry and foundation sponsors of the MIT Joint Program on the Science and Policy of Global Change. For a complete list of sponsors and U.S. government funding sources, see http://globalchange.mit.edu/sponsors. 2019-07-01T21:11:54Z 2019-07-01T21:11:54Z 2018-04 Working Paper https://hdl.handle.net/1721.1/121476 Report 329 en_US MIT Joint Program Report Series;329 application/pdf MIT Joint Program on the Science and Policy of Global Change |
| spellingShingle | Jacoby, Henry D Montgomery, David Yuan, Mei Next Steps in Tax Reform |
| title | Next Steps in Tax Reform |
| title_full | Next Steps in Tax Reform |
| title_fullStr | Next Steps in Tax Reform |
| title_full_unstemmed | Next Steps in Tax Reform |
| title_short | Next Steps in Tax Reform |
| title_sort | next steps in tax reform |
| url | https://hdl.handle.net/1721.1/121476 |
| work_keys_str_mv | AT jacobyhenryd nextstepsintaxreform AT montgomerydavid nextstepsintaxreform AT yuanmei nextstepsintaxreform |