Reports & Academic Papers

This amended policy brief evaluates the macroeconomic and distributional implications of both the House-passed and Senate-passed versions of the One Big Beautiful Bill (OBBB). The Senate (and final) version is largely similar to the House bill in structure and priorities. Both preserve the core individual income tax provisions of the …

The 2017 Tax Cuts and Jobs Act (TCJA) introduced a tax deduction of 20% of qualified business income (QBI) for pass-through businesses. This provision is set to expire at the end of 2025, but Republican lawmakers have proposed both extending it and increasing the deduction to 23%. This brief describes …

Federal agencies such as NIH and NSF are critical sources of funding for basic and applied scientific research. Recently, many of these agencies have seen their research operations frozen or downsized. This brief describes a new analysis of the macroeconomic costs of cutting federal funding for scientific R&D. The brief …

The TCJA cut income taxes on top earners from 39.6% to 37%, among other changes. This brief assesses the macroeconomic impact of making the TCJA tax cut on top earners permanent compared to letting it expire and compared to raising it. IMPA’s assessment shows that permanent extension of the TCJA …

This technical note describes how, under the current system of capital gains taxation, capital gain income is taxed at lower rates than labor income—and only upon realization of the gains and with a step-up in basis at death. This system distorts the economy and contributes to inequality. Lower tax rates …

This brief, authored by Ira Regmi and Niko Lusiani, lays the groundwork for a pro-competition corporate income tax system, emphasizing the economic rationale for taxing the excess profits of large U.S. businesses. A preliminary draft was shared to kick off the IMPA-RI co-organized expert convening at American University in October …

This academic paper studies the optimal design of corporate tax policy in a textbook life-cycle model featuring two key deviations: (i) firms are imperfectly competitive and (ii) households save by purchasing equity shares in a stock market. In this simple environment, the financial wealth of savers is equal to the …

Vice President Kamala Harris proposes raising the corporate tax rate to 28% from its current 21%, while former President Donald Trump proposes lowering it to 15%. The IMPA model projects that the Harris proposal will modestly increase GDP and government revenue. In contrast, it projects that the Trump proposal will …

This technical note first describes key differences between estimating the impact of a change in tax policy at the firm (microeconomic) level and at the overall (macroeconomic) level. It then explains how macroeconomic models are used to infer the overall effects of policy reforms and how alternative assumptions – such …

This brief provides a new analysis of the macroeconomic effects of raising taxes on dividend income and capital gains. Increasing dividend income and capital gains taxes from 20% to 39.6% for households earning over $1 million would raise government revenue by about 5% and GDP by about 1% in the …

This academic paper studies the relationship between firms’ decisions about capacity, its utilization, and inflation. To do this, we introduce endogenous capacity utilization into a New Keynesian (NK) model. In our model, firms set capacity under demand uncertainty, utilizing both an effort margin and capacity expansion to meet demand. This …

This brief explains a new analysis of a Republican proposal to repeal the clean energy credits from the 2022 Inflation Reduction Act. The analysis finds that withdrawal of the clean energy credits would reduce GDP by approximately 2% in the long run from its anticipated level under current policy, while …

This academic paper studies the effects of capital account liberalization on female employment and its implications for structural change in developing countries. Using a large industry-level panel of 88 low and low-middle-income countries, we provide evidence that episodes of financial liberalization lead to large declines in female employment in tradable …

This academic paper studies the aggregate and distributional effects of corporate tax reforms when market power is heterogeneous across sectors and firms. We use a life-cycle model with incomplete markets in which capital and equity do not always move in tandem when corporate tax policy changes. On the one hand, …

This brief explains IMPA’s analysis of the corporate tax cuts in the Tax Cuts and Jobs Act (TCJA). IMPA’s analysis accurately predicts the growth in investment, output, jobs, and wages that followed its enactment. Read Full Report This paper builds on the work from IMPA’s series on corporate tax policy …