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Kozi Checks & Balances TaxTactics News

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December 20.2024

2 Minutes Read

Exploring the Economic Impact of Extending the Tax Cuts and Jobs Act

TCJA extension analysis with Yuan and Dollar comparison.

Overview of Economic Analyses by CBO and JCT

The Congressional Budget Office and the Joint Committee on Taxation have released their analyses on extending the individual provisions of the Tax Cuts and Jobs Act (TCJA), set to expire at the end of 2025. These analyses are fundamental in understanding the economic implications and form part of the crucial discussions in next year’s tax policy debates.

JCT Models and Predictions

The JCT uses three main macro models to predict the economic outcomes: the Macroeconomic Equilibrium Growth Model, the Overlapping Generations Model, and the Dynamic Stochastic General Equilibrium Model. These models offer a dynamic view by projecting how extensions might affect GDP over a budget window from 2025 to 2034. JCT's findings suggest extending TCJA would reduce revenue but could provide a GDP boost, ranging from 0.2% to 0.9%, depending on the chosen model.

CBO’s Take: Growth Versus Deficit

While JCT finds a growth scenario with TCJA extension, the CBO cautions that the potential benefits could be neutralized by increasing deficits that might hinder private investments. Their analysis serves as a critical balance, ensuring policymakers consider both the economic benefits and fiscal responsibilities.

Future Implications

With current budget rules necessitating a weighted average of model results, the future of TCJA’s extension will require careful consideration of each model’s strengths and potential bias. An average GDP growth prediction of 0.5% leaves room for dynamic revenue feedback, possibly trimming extension costs significantly. Such insights highlight the importance of a nuanced approach to tax legislation, signaling a pivotal shift in fiscal policy strategies going forward.

Tax Deduction Deep-Dives

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07.19.2025

Exploring the EU CORE Proposal: What It Means for Businesses

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07.10.2025

Alabama's Pro-Growth Tax Reforms Aim to Boost Economic Growth

Update Alabama's Tax Reforms: A Bold Move Towards Economic Growth The 2025 legislative session in Alabama has become a beacon of hope for businesses and taxpayers alike, as the government rolled out transformative tax reforms aimed specifically at boosting the state's economic framework. Spearheaded by Governor Kay Ivey, these measures emphasize simplicity, neutrality, and efficiency—qualities essential for attracting business investments and facilitating growth. Mobile Workforce Relief: A Game Changer for Employers One of the standout reforms is the introduction of Act 2025-334, which provides a 30-day safe harbor for nonresident employees. This new policy allows workers to perform tasks in Alabama without being burdened by the state income tax, provided they work less than 30 days within a calendar year. This makes Alabama a more appealing destination for businesses with mobile employees, fostering a work environment that embraces flexibility. Tangible Personal Property Tax Exemption: Easing Financial Pressures Another significant change is seen in Act 2025-344, where the tangible personal property (TPP) tax exemption threshold rises from $40,000 to $100,000. This adjustment offers much-needed relief for small and medium-sized enterprises, sparing them from filing complex TPP returns and reducing administrative burdens. This more generous exemption allows businesses to redirect resources that would otherwise be consumed by tax compliance towards growth and innovation. Predicting a Brighter Future The combination of mobile workforce relief and heightened TPP exemptions positions Alabama favorably in the landscape of tax competitiveness. As the 2026 State Tax Competitiveness Index approaches, these pro-growth reforms could significantly enhance Alabama's reputation among businesses considering expansion or relocation. Concluding Thoughts Such legislative advancements highlight a commitment to improving the local business climate while acknowledging the requirements of modern workforces. As Alabama embraces these reforms, the anticipated outcomes—such as increased job creation and economic resilience—will define the state’s trajectory in the years to come.

07.08.2025

How OECD's BEPS Initiative is Shaping International Tax Compliance

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Exploring the Economic Impact of Extending the Tax Cuts and Jobs Act

Overview of Economic Analyses by CBO and JCT

JCT Models and Predictions

CBO’s Take: Growth Versus Deficit

Future Implications

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