Martin Feldstein: Raise Taxes, but Not Tax Rates
An op-ed in today's New York Times by Harvard economics professor Martin Feldstein says that while reducing our debt will require more revenue, that doesn't necessarily mean higher tax rates. Feldstein proposes the idea of capping the amount that tax expenditures as a whole can save an individual taxpayer to a maximum percentage of their income. This reform would decrease the amount of revenue lost through tax expenditures without having to go through the politically difficult process of singling out specific tax deductions for elimination.
Feldstein developed and studied this reform with CRFB president Maya MacGuineas and Daniel Feenburg of the National Bureau of Economic Research. They published their findings in a paper released last month, Capping Individual Tax Expenditure Benefits, which projects that capping the amount that tax expenditures can reduce each individual's tax burden at 2 percent of their adjusted gross income (AGI) would raise $278 billion in 2011.
Click here to read the full op-ed.
Click here to read the full paper.
Martin S. Feldstein, a professor of economics at Harvard, was the chairman of the Council of Economic Advisers from 1982 to 1984 under President Ronald Reagan.