June 13, 2024

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Tax Foundation Facts

The Tax Foundation is a Washington, D.C. based think tank that tracks and analyzes government spending and tax policies. The organization publishes research studies and compiles data on U.S. tax and spending policies. For its part, the foundation supports public policy and opposes tax increases and cuts. Here are some of the tax reform facts:

The Tax Foundation was founded on December 5, 1937. Its board of directors was composed of Lewis H. Brown, Jr., Donaldson Brown, and Lewis H. Brown, President of the Johns-Manville Corporation and Standard Oil Company of New Jersey. The organization’s stated goal was to monitor the federal, state, and local tax policies. The organization’s offices were located at 50 Rockefeller Plaza, but later moved to 30 Rockefeller Center.

The Tax Foundation General Equilibrium Model focuses on revenue and economic impacts of tax policy. The model produces year-by-year estimates over a ten-year budget window. The General Equilibrium Model includes three main components: a tax simulator, a neoclassical production function, and a demand or allocation function. The Tax Foundation General Equilibrium model can also produce comparative statics or annual estimates over a 10-year budget window.

In contrast, the Tax Foundation uses hypothetical taxpayers. In one hypothetical scenario, a single, unmarried person dies with $100 million in wealth. The hypothetical taxpayer owed no income tax during his or her lifetime, but had to pay income tax after his death. In other words, under the proposal by President Biden, this hypothetical taxpayer would pay an income tax of 61.1 percent. The Tax Foundation explains this assumption as a simplification of reality, but it is not based on reality. In the end, the result is a highly inaccurate picture of tax rates for the super-rich.

The data that the Tax Foundation reveals in its annual “Tax Freedom Day” report are skewed. Since two-thirds of the tax burden is federal, the Tax Foundation’s methodology overstates the burden on middle-class families. Further, this methodology may result in the misimpression that state policies are responsible for tax rates, which they are not. So, tax-free states can be a reality for millions of Americans.

Who Are the Directors of the Tax Foundation? The Tax Foundation is comprised of several people with diverse backgrounds. Its president, Scott Hodge, has extensive experience in tax policy. He was previously the executive director of the Institute for Research on Economic Taxation. His other key members are Josh Jaye, a director of corporate relations at the ALEC, and Bill Archer, who has worked as a policy adviser to Senator Mike Lee and the American Enterprise Institute. The group’s media relations manager is Jesse Solis. Earlier, Solis was the deputy director of communications for the Republican staff of the House Ways and Means Committee.

While the Tax Foundation does not use the exact formulas used to calculate state tax burdens, they do provide some useful information. The most reliable metric to compare revenue levels is the percentage of GDP or national income derived from total tax receipts. In this regard, the Tax Foundation reports on page one of their analysis that the federal effective tax rate in 2018 will be 30 percent. It is estimated that $3.4 trillion of federal income will be paid by American workers.

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