# Tax Foundation The **Tax Foundation** is a Washington, D.C. think tank founded in 1937, focused exclusively on **tax policy analysis at the federal, state, and international levels**. It is the **oldest continuously operating tax-policy think tank in the United States** and is the principal source of tax-modeling and distributional-analysis output used by Republican Congressional staff and conservative-aligned media. The Foundation positions itself as nonpartisan but operates in practice as a **center-right tax-policy authority** — its modeling consistently shows pro-growth effects from supply-side tax cuts and pro-investment effects from corporate-rate reductions, framings that align with Republican tax policy preferences. Critics from the left (notably the Tax Policy Center jointly run by [[Brookings Institution]] and Urban Institute) regularly produce competing distributional analyses showing more concentrated benefits at the top of the income distribution. ## Founding and Trajectory The Tax Foundation was founded in 1937 by a group of business leaders including Alfred P. Sloan (General Motors), Donaldson Brown (DuPont), and others associated with the Liberty League and the broader business-conservative response to [[New Deal]] economic policy. The founding premise was that ordinary citizens lacked the analytical resources to evaluate the rapidly expanding federal and state tax regimes of the Roosevelt era, and that a research organization producing accessible tax data would serve a public-information function while also generating analytical material favorable to lower-tax positions. The org operated relatively quietly for several decades before substantially expanding in the 1980s and 1990s. The post-2000 period saw the Foundation build out its **Center for State Tax Policy** (now publishing the influential annual *State Business Tax Climate Index*) and the **Center for Federal Tax Policy** (the principal vehicle for Foundation modeling of major federal tax legislation). The 2017 Trump-era **Tax Cuts and Jobs Act (TCJA)** was a particularly visible Foundation moment: the Tax Foundation's dynamic-scoring models of TCJA effects were among the most widely cited in the legislative debate, with Republican members of Congress and conservative media routinely citing Foundation analyses claiming TCJA would substantially increase GDP growth over the 10-year budget window. ## Programmatic Output - **Center for Federal Tax Policy** — analyses of federal tax legislation, including the principal Republican-side modeling of TCJA, TCJA extension fights, and pending federal-tax negotiations - **Center for State Tax Policy** — annual *State Business Tax Climate Index* rankings; widely used by state-level economic-development agencies and by site-selection consultants - **Center for International Tax Policy** — work on the OECD Pillar 1/Pillar 2 global minimum tax negotiations, especially from a U.S.-corporate-interests perspective - **Taxes and Growth (TAG) Model** — the Foundation's dynamic-scoring macroeconomic model used for federal tax policy analysis - **Annual *Facts & Figures* publication** — the standard reference for state-by-state tax statistics ## The Dynamic-Scoring Question The most consequential analytical question around the Tax Foundation is its commitment to **dynamic scoring** — the methodology of projecting that tax-rate reductions will produce sufficient additional economic activity to recover some (or in some claims all) of the static revenue loss. The Foundation's dynamic scoring has consistently produced more optimistic growth projections than the official Congressional Budget Office (CBO) or Joint Committee on Taxation (JCT) scoring of major Republican tax legislation. For TCJA specifically, the Foundation projected meaningfully higher GDP growth effects than JCT did; subsequent post-TCJA economic data have been variably interpreted as confirming or refuting these projections, with the COVID-19 disruption complicating any clean evaluation. The methodological question of dynamic scoring is one of the longest-running debates in U.S. tax-policy analysis and represents a genuine technical-and-ideological intersection: it is both a real econometric-modeling debate and a debate where the choice of modeling assumptions has direct partisan implications. ## Funding Tax Foundation funding is consistent with other center-right tax-policy organizations: - Foundation grants — [[DonorsTrust]], [[Sarah Scaife Foundation]], [[Bradley Foundation]] (historically) - Corporate sponsors — broad cross-section of major U.S. corporations - Individual donors - Industry-association support — chambers of commerce, business roundtables The Foundation is somewhat less directly connected to the Koch-DonorsTrust dark-money infrastructure than peer organizations like [[Mercatus Center]] or [[Cato Institute]], reflecting its older institutional base and its more directly business-funded model. ## KB Significance The Tax Foundation matters to the KB for three structural reasons: 1. **The Republican-side TCJA modeling.** The Foundation's TCJA dynamic-scoring analyses are an important episode in the broader story of how Republican tax legislation gets sold to the public: by think-tank modeling claiming larger growth effects than official scorekeepers project. The same dynamic was at work in 2001 and 2003 (Bush 43 tax cuts), in 2017 (TCJA), and is at work in 2025–2026 for the TCJA extension fight. 2. **The state-policy infrastructure.** The annual *State Business Tax Climate Index* is one of the most operationally consequential single Foundation products — state governments adjust their tax codes specifically to improve their Index rankings, making the Foundation a meaningful actor in inter-state tax competition. 3. **The dynamic-scoring debate.** The methodological commitment to dynamic scoring puts the Foundation at the center of one of the most consequential ongoing debates in U.S. fiscal analysis — a debate where technical-modeling choices have direct partisan-budget implications. ## See Also - [[American Enterprise Institute]] — peer center-right economic-policy shop - [[Heritage Foundation]] — broader movement-right peer - [[Mercatus Center]] — peer Koch-funded academic libertarian shop - [[Cato Institute]] — peer libertarian shop - [[Americans for Tax Reform]] — peer tax-advocacy organization ([[Grover Norquist]]) - [[Council for National Policy]] — peer movement-coordination body - [[Think Tank Ecosystem]] — broader ecosystem hub