Tax Foundation Explained

Tax Foundation
Formation:
New York City, New York, U.S.
Type:Think tank
Headquarters:1325 G Street NW, Suite 950
Location:Washington, D.C., U.S.
Leader Title:President
Leader Name:Daniel Bunn

The Tax Foundation is an international research think tank based in Washington, D.C. that collects data and publishes research studies on U.S. tax policies at both the federal and state levels. Its stated mission is to "improve lives through tax policy research and education that leads to greater economic growth and opportunity".[1]

The Tax Foundation is organized as a 501(c)(3) tax-exempt non-profit educational and research organization, with three primary areas of research: the Center for Federal Tax Policy,[2] the Center for State Tax Policy,[3] and the Center for Global Tax Policy.[4] The group is known for its annual reports such as the State Business Tax Climate Index,[5] International Tax Competitiveness Index,[6] and Facts & Figures: How Does Your State Compare,[7] which was first produced in 1941.[8]

History

The Tax Foundation was organized on December 5, 1937, in New York City by Alfred P. Sloan Jr., Chairman of the General Motors Corporation; Donaldson Brown, GM Financial Vice President; William S. Farish, President of Standard Oil Company of New Jersey (Exxon); and Lewis H. Brown, President of Johns-Manville Corporation, who later became the first chairman of the board of The Tax Foundation.[9] The organization's stated goal was "to monitor the tax and spending policies of government agencies".[10] Its offices were located at 50 Rockefeller Plaza and later 30 Rockefeller Plaza.

The Tax Foundation's first project was a successful effort to stop a tax increase in Westchester County, New York, where they provided research and analysis (including an "Expenditure Survey" of state spending) to local activists.[10] By 1943, the Tax Foundation had helped set up taxpayers associations and expenditure councils in 35 states.[10]

During World War II, Tax Foundation research emphasized restraining government spending domestically to finance wartime expenditures. In 1948, the Tax Foundation opened an office in Washington, D.C., and in 1978 relocated there completely.[10] Its research and analysis has historically emphasized publicizing federal and state financial information, arguing against the use of tax systems for "social engineering," and urging "broad bases and low rates" tax reform.[10]

Beginning in 1990, the Tax Foundation "operate[d] as a separate unit" of Citizens for a Sound Economy.[11] By July 1991, it was again operating as an independent 501(c)(3) organization.[12]

Beginning in 2009, the Tax Foundation's offices were located in the National Press Building in Washington, D.C.[13] In 2015, the organization moved to its current location on G Street.[14]

Goals and principles

The Tax Foundation states that its research is guided by what it calls the principles of sound tax policy: simplicity, transparency, neutrality, and stability.[15]

Tax Foundation research is generally critical of tax increases,[16] [17] [18] [19] high business taxes,[20] excise taxes,[21] tax preferences for the housing industry,[22] and use of tax credits, which the Foundation views as "picking winners and losers".[23] [24] The Foundation has spoken favorably of efforts to balance the federal budget with tax reform and significant spending cuts, such as the Bowles-Simpson plan,[25] the Ryan Plan,[26] and the Wyden-Coats plan.[27]

Organizational overview

Political orientation

The Tax Foundation describes itself as an "independent tax policy research organization". It is cited in the media as a nonpartisan or bipartisan organization,[28] [29] [30] [31] [32] [33] [34] [35] and is also described as business-friendly, conservative, and center-right.[36] [37] [38] [39]

Board of directors

As of 2023, the organization's board of directors consists of David P. Lewis (chairman), James W. Lintott (treasurer), Bill Archer, Philip English, Dennis Groth, Douglas Holtz-Eakin, Stephen Kranz, Sarah McGill, Pamela F. Olson, and Tom Roesser.[40]

Finances

The Tax Foundation accepts grants from foundations, corporations, and individuals. It does not solicit or accept funds from government sources.[41] The Tax Foundation has earned a 3 out of 4 star financial rating and 4 out of 4 star accountability and transparency rating from Charity Navigator.[42]

Year Revenues Expenses
2017[43] $5,115,594$4,548,092
2016[44] $4,274,002$4,178,093
2015[45] $3,557,681$3,722,271
2014[46] $3,675,132 $2,971,778
2013[47] $2,953,060 $2,469,668
2012[48] $2,192,620 $1,900,821
2011[49] $1,885,201 $1,768,828
2010 $1,854,135 $1,925,936

Activities

The Tax Foundation publishes several major studies, including Options for Reforming America's Tax Code, which details the economic and revenue impact of over 80 potential changes to the U.S. tax code.[50]

The group uses its Taxes and Growth (TAG) macroeconomic model to simulate the effects of tax policies and produce conventional and dynamic estimates of potential changes in revenue, GDP, wages, employment, and the distribution of the federal tax burden.[51] The TAG model is a "neoclassical, comparative-statics economic model coupled with a tax return simulator".[52] The economic model estimates supply of labor and cost of capital based on marginal tax rates calculated by the tax return simulator.

Since 2014, the TAG model has been used to analyze legislative and campaign tax proposals, including the Tax Reform Act of 2014 proposed by Dave Camp,[53] plans put forth during the 2016 presidential campaigns,[54] [55] the House GOP's 2016 tax reform blueprint,[56] and the Tax Cuts and Jobs Act.[57] [58]

Since 2013, the Tax Foundation has offered guidance to same-sex married couples filing income taxes at the state level, where local laws recognizing same-sex marriage can vary considerably.[59] [60]

Every year, the Tax Foundation calculates and announces Tax Freedom Days in the United States. These studies have been criticized by the Center on Budget and Policy Priorities (CBPP), a progressive think tank, and in turn the Tax Foundation has responded to or criticized CBPP reports.[61] [62] [63] [64] However, the two groups have worked together on analysis of the marriage penalty in the US federal income tax.[65]

The Tax Foundation has been a vocal critic of the Trump administration's trade policies, particularly tariffs.[66]

Reception

In a column for The New York Times blog The Upshot, Josh Barro, a former Tax Foundation employee, criticized the group's approach to scoring the RubioLee tax plan as producing "implausibly rosy results".[67] The Tax Foundation published a response to these criticisms, stating that their model results were "in line with analysis done by other mainstream economists for similar tax changes".[68]

In opinion editorials for the New York Times, economist Paul Krugman has characterized the Tax Foundation as "not a reliable source" while criticizing a report by the Tax Foundation comparing corporate tax rates in the United States to those in other countries.[69] Krugman has also accused the Tax Foundation of "deliberate fraud" in connection with a report it issued concerning the American Jobs Act.[70] The Tax Foundation has published various responses to Krugman's criticisms.[71] [72]

See also

External links

Notes and References

  1. Web site: Who We Are . 2019-02-20 . Tax Foundation.
  2. Web site: Center for Federal Tax Policy. Tax Foundation. 2017-02-15.
  3. Web site: Center for State Tax Policy. Tax Foundation. 2017-02-15.
  4. Web site: 2023-10-18 . Center for Global Tax Policy . 2024-01-31 . Tax Foundation . en-US.
  5. Web site: 2023-10-24 . 2024 State Business Tax Climate Index . 2024-01-31 . Tax Foundation . en-US.
  6. Web site: Mengden . Alex . 2023-10-18 . International Tax Competitiveness Index 2023 . 2024-01-31 . Tax Foundation . en-US.
  7. Web site: Facts & Figures Handbook: How Does Your State Compare?. 2012-02-15. Tax Foundation. 2017-02-15.
  8. Web site: Tax Facts & Figures, First Edition. January 1941. Tax Foundation. 2017-02-15.
  9. Web site: 2002-09-01 . Celebrating Our 65th Year . 2017-02-15 . Tax Foundation.
  10. Web site: 1987-12-05 . Tax Foundation 1937–1987: The First Fifty Years . 2017-02-15 . Tax Foundation.
  11. Web site: Tax Features. January 1990. Tax Foundation. 34. 1. 2017-02-15.
  12. Web site: Tax Features. July 1991. Tax Foundation. 35. 6. 2017-02-15.
  13. Web site: Tax Foundation, Contact Us . Taxfoundation.org . 2012-04-05.
  14. Web site: Office Warming Reception . Tax Foundation. taxfoundation.org . 2017-10-27 . https://web.archive.org/web/20150205071057/https://taxfoundation.org/event/office-warming-reception . 2015-02-05 . February 4, 2015.
  15. Web site: Principles of Sound Tax Policy. August 20, 2007. Tax Foundation. 2017-02-15.
  16. Web site: Portland Business Journal, Tax Foundation Criticizes State Tax Hikes. 2009-07-09. Taxfoundation.org. https://web.archive.org/web/20111103073858/http://www.taxfoundation.org/research/show/24870.html. 2011-11-03. 2012-04-05.
  17. Web site: State Budgets: Maryland Tax Increases Can't Keep Up With Spending Increases. Henchman. Joseph. 2008-12-29. Tax Foundation. 2017-02-15.
  18. Web site: The Economic Cost of High Tax Rates. Carroll. Robert. 2009-07-29. Tax Foundation. 2017-02-15.
  19. Web site: The Dam Bursts in the Beaver State: Oregon's Wave of Tax Increases and New Spending. Henchman. Joseph. Mountjoy. Jack. 2009-07-09. Tax Foundation. 2017-02-15.
  20. Web site: Business Taxes. Tax Foundation. 2017-02-15.
  21. Web site: Excise Taxes. Tax Foundation. 2017-02-15.
  22. Web site: Giuliani Wrong on Mortgage Interest Deduction. Prante. Gerald. 2007-12-03. Tax Foundation. 2017-02-15.
  23. Web site: Louisiana Tax Credits: Politicians Picking Winners and Losers. Henchman. Joseph. 2009-07-11. Tax Foundation. 2017-02-15.
  24. Web site: Tax Foundation, Remarks to the Shaftesbury Society Luncheon. Henchman. Joseph. 2009-05-05. Tax Foundation. 2017-02-15.
  25. Web site: Draft from President's Deficit Commission Stirs the Fiscal Pot in Washington. 2010-11-10. Tax Foundation. 2017-02-15.
  26. Web site: Ryan Plan Smartly Marries Tax Reform with Spending Reform. Hodge. Scott. April 5, 2011. Tax Foundation. 2017-02-15.
  27. Web site: Wyden-Coats Tax Reform Plan Adds to Debate But Needs Fixing. Hodge. Scott. April 8, 2011. Tax Foundation. 2017-02-15.
  28. News: Donald Trump's new tax plan could have a big winner: Donald Trump's companies. Washington Post. 2016-09-15.
  29. News: Why Americans are giving up citizenship in record numbers. Washington Post. 2016-09-15.
  30. News: Tax Watch; Hidden Ways To Gain Revenue. Rosen. Jan M.. 1988-12-05. The New York Times. 0362-4331. 2016-09-15.
  31. News: ON THE CONTRARY; How New Campaign Laws Would Help the Economy. Akst. Daniel. 2001-02-04. The New York Times. 0362-4331. 2016-09-15.
  32. News: Looking to Taxes as Solution to a Crisis. O'shea. James. 2010-02-26. The New York Times. 0362-4331. 2016-09-15.
  33. News: Wealthier New Yorkers Aren't Fleeing the City for Tax Havens, a Study Says. Roberts. Sam. 2014-07-20. The New York Times. 0362-4331. 2016-09-15.
  34. News: The Partisan Tax Policy Center. Sumerlin. Marc. 2016-03-04. Williams. Noah. Wall Street Journal. 0099-9660. 2016-09-15.
  35. Web site: Trump's Latest Economic Plan: New Promises, Same Old Problems. White. Gillian B.. The Atlantic. en-US. 2016-09-15. September 15, 2016.
  36. Web site: Trump's tax pitch. POLITICO. 2016-09-15.
  37. News: Barro. Josh. Fact-Checking Republicans on Tax Plans. 15 September 2016. New York Times. October 29, 2015.
  38. News: Sloan. Allan. The whopping $1.2 trillion omission in Trump's tax reform plan. 15 September 2016. Washington Post. August 17, 2016.
  39. Web site: Biden tax hikes would undercut his 'Made in America' plan, economists warn. October 19, 2020.
  40. Web site: Meet Our Board. Tax Foundation. 2023-05-09.
  41. Web site: Financials. Tax Foundation. 2017-02-15.
  42. Web site: Charity Navigator Rating – Tax Foundation. 2015-04-09.
  43. Web site: Form 990 Return of Organization Exemption From Income Tax. 2018-09-26. taxfoundation.org. 2019-02-20.
  44. Web site: Form 990 Return of Organization Exemption From Income Tax. 2017-08-11. taxfoundation.org. 2019-02-20.
  45. Web site: Form 990 Return of Organization Exemption From Income Tax. 2016-08-03. taxfoundation.org. 2017-02-15.
  46. Web site: Form 990 Return of Organization Exemption From Income Tax. 2015-05-13. taxfoundation.org. 2017-02-15.
  47. Web site: 2013 Form 990, Tax Foundation. Foundation Center. 2015-04-09.
  48. Web site: 2012 Form 990, Tax Foundation. Foundation Center. 2015-04-09.
  49. Web site: 2011 Form 990, Tax Foundation. Foundation Center. 2015-04-09.
  50. 2016-06-06 . Options for Reforming America's Tax Code . Tax Foundation . 2019-02-20.
  51. Web site: 2018-09-06. Written Testimony of Scott Hodge President of the Tax Foundation Before the Joint Economic Committee: The Positive Economic Growth Effects of the Tax Cuts and Jobs Act. 5 . 2019-02-20.
  52. December 2017 . Macroeconomic Modeling of Tax Policy: A Comparison of Current Methodologies . Auerbach . Alan . Brinberg . Itai . National Tax Journal . 70 . 4 . 819–836 . PDF . 2019-02-20. 10.17310/ntj.2017.4.06 . 158196589 .
  53. Web site: 2014-07-30 . Written Testimony of Scott A. Hodge, President, Tax Foundation: Dynamic Analysis of the Tax Reform Act of 2014 Before the U.S. House of Representatives Committee on Ways and Means, Subcommittee on Select Revenue Measures . Hodge . Scott . 2019-02-20.
  54. Web site: 2015-10-30 . The pluses and minuses in Ted Cruz's tax plan . Rubin . Jennifer . The Washington Post . 2019-02-20.
  55. Web site: 2015-10-29 . Fact-Checking Republicans on Tax Plans . Barro . Josh . The Upshot . The New York Times . 2019-02-20.
  56. Web site: 2016-11-15 . House Republicans Aim to Cut Taxes Without Increasing Deficits . Rubin . Richard . The Wall Street Journal . 2019-02-20.
  57. Web site: 2017-11-26 . The Wall Street Journal . Tax Reform, Growth and the Deficit . 2019-02-20 .
  58. Web site: 2017-11-09 . House GOP Tax Plan Is Little Help To High-Tax States Like New Jersey . . 2019-02-20.
  59. Web site: Wisconsin Offers Constructive Tax Filing Guidance for Same-Sex Couples. Joseph. 2013-09-13. Tax Foundation. Henchman. 2017-02-15.
  60. Web site: 10 Remaining States Provide Tax Filing Guidance to Same-Sex Married Taxpayers. Joseph. 2015-03-20. Tax Foundation. Henchman. 2017-02-15.
  61. Book: Brooks. Neil. Tax Freedom Day: A Flawed, Incoherent and Pernicious Concept. 2005. Canadian Center for Public Policy Alternatives. 9780886274382. 26.
  62. News: Brunori. David. Why Tax Freedom Day Matters. 16 September 2016. Forbes. April 24, 2016.
  63. News: "Tax Freedom Day" Analysis Can Give a Misleading Impression of Tax Burdens. 16 September 2016. Center on Budget and Policy Priorities. April 8, 2014.
  64. News: Analysis Shows Center on Budget and Policy Priorities' Criticism of Tax Freedom Day Flawed and Inaccurate. March 30, 2006. Tax Foundation. Ahern. William. 2017-02-15.
  65. Web site: Tax Day: Are You Receiving a Marriage Penalty or Bonus? . The New York Times . April 15, 2015 . September 5, 2015.
  66. Web site: York . Erica . 2023-07-07 . Tracking the Economic Impact of Tariffs . 2024-01-31 . Tax Foundation . fr-FR.
  67. Web site: 2015-03-17 . Tax Cuts Still Don't Pay for Themselves . Barro . Josh . The Upshot . The New York Times . 2019-02-20.
  68. Web site: 2015-03-17 . A Response to Josh Barro on Dynamic Scoring . Hodge . Scott . Lundeen . Andrew . Tax Foundation . 2019-02-20.
  69. Web site: The Tax Foundation is not a reliable source . Paul . Krugman . The Conscience of a Liberal blog, nytimes.com . 2008-08-24 . March 18, 2011.
  70. Web site: Stocks, Flows, and Fuzzy Math . Krugman.blogs.nytimes.com . October 11, 2011 . October 17, 2011.
  71. News: Grasping at Straws: A Response to Paul Krugman. July 26, 2012. Tax Foundation. McBride. William. 2017-02-15.
  72. News: Response to Paul Krugman on "Millionaire" Taxes. October 11, 2011. Tax Foundation. Hodge. Scott. 2017-02-15.

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