Skip to content

The Tealbook

Options to Broaden the US Tax Base

A raft of tax loopholes and preferential treatments totaling $1.5 trillion shrink the tax base, lose revenues, and attract tax avoidance and evasion instead of productive investment.

A major year of tax policy is looming in 2025, when several tax cuts enacted in the 2017 tax law are set to expire, making it a good opportunity to consider policies to broaden the tax base.

The current tax base is the foundation for the federal tax system, but allows too many opportunities for especially sophisticated taxpayers to avoid and even evade taxes. Whatever one’s view on whether the tax system should be smaller or larger, cracks and holes in the tax base yield worse outcomes for the American people as taxpayers expend effort on aggressive tax planning that could go into more productive economic activity.

Beginning to address the revenue shortfall from two decades of tax cuts will be especially important as lawmakers look towards 2025, when individual provisions of the 2017 tax law are set to expire. Some lawmakers argue the tax cuts should all be extended, without offsetting the cost. Such a course would lower revenues, add to deficits, and increase inequality. Given the fiscal and economic challenges that the nation will face, lawmakers should at least fully pay for any extension. Measures to strengthen the tax base should be a key part of that discussion.

The Tax Law Center aims to deepen the conversation about tax policymaking in 2025 by providing detailed options for potential changes that go beyond simply ending, extending, or dialing up and down provisions of the 2017 tax law, offering a broader range of options to improve the integrity of the tax system that can be considered.

The Tax Law Center at NYU Law was created to bring deep tax law expertise to bear in the public interest—of the quality that well-resourced filers regularly use to seek preferential treatment. The Tax Law Center’s tax attorneys have expertise across the tax system, including roles at the IRS Chief Counsel’s office; the Department of Treasury Office of Tax Policy; the House Ways and Means Committee; and private law and accounting firms that represent high-net worth individuals and large businesses. Our staff also use their expertise to seek and evaluate the perspectives of practitioners and experts who can point to holes in the tax system from their own work. We benefit from the guidance of our Advisory Board, which brings decades of leadership experience in government, private practice, academia, and policy design.

Many of the options to broaden the tax base in this compilation are well known, but some have received less attention or are new approaches that we have crafted. For example, we propose ways to strengthen recently enacted reporting regimes such as the bipartisan Corporate Transparency Act and the 1099-K reporting requirements for third-party settlement organizations. We also suggest implementing new reporting regimes focused on increasing compliance among high-net-worth individuals by requiring reporting in the dealing of high-value art and antiquities and reporting when foreign trusts are bought onshore. We further recommend adjusting or clarifying the tax treatment of items like non-business usage of company-owned jets and large categories of stock buybacks to be more consistent with their economic value and tax principles elsewhere in the Code.

Even for well-known ideas, we have drawn upon our distinctive expertise to add depth and nuance, or to update existing work for an evolving market and policy climate. Examples include our ongoing analyses of thorny issues like state-level SALT cap workarounds and the treatment of Qualified Small Business Stock.

The options discussed here include initiatives that can be pursued via regulation or legislation. In some cases, the change could be made by either the Treasury Department changing relevant regulations or Congress writing new legislation; in other cases, the change could be done only via legislation since the Treasury Department does not have sufficient discretion to effect the policy change. Here, we note the context in which we analyzed the option—whether as a regulatory or legislative option—but do not make any recommendations about the best approach. In some cases we note where we have work in progress that is not yet published as a detailed analysis, but where we have developed expertise and are happy to discuss or learn about relevant possibilities.

To give an approximate sense of scale, we have classified proposals using the following categories based on our sense of potential revenue raised over ten years: less than $1 billion; $1 billion–$10 billion; $10 billion–$50 billion; and more than $50 billion. These categories are applied with low confidence unless indicated otherwise by government estimate.

We will update this resource regularly as our work continues.