CBO Releases Tax Revenue Options

The Congressional Budget Budget Office yesterday released Reducing the Deficit: Spending and Revenue Options:

The CBO regularly issues a compendium of budget options to help inform federal lawmakers about the implications of possible policy choices. This volume—one of several reports that CBO produces regularly for the House and Senate Committees on the Budget—presents more than 100 options for altering federal spending and revenues. Nearly all of the options would reduce federal budget deficits. The report begins with an introductory chapter that describes the current budgetary picture and the uses and limitations of this volume. Chapters 2 and 3 present options that would reduce mandatory and discretionary spending, respectively. Chapter 4 contains options that would increase revenues from various kinds of taxes and fees.

Individual Income Tax Rates

 

Option 1 Increase Individual Income Tax Rates

 

Option 2 Raise Tax Rates on Capital Gains

 

Individual Income Tax Base

Option 3 Use an Alternative Measure of Inflation to Index Some Parameters of the Tax Code

 

Option 4 Gradually Eliminate the Mortgage Interest Deduction

 

Option 5 Limit or Eliminate the Deduction for State and Local Taxes

 

Option 6 Curtail the Deduction for Charitable Giving

 

Option 7 Limit the Tax Benefit of Itemized Deductions to 15 Percent

 

Option 8 Include Employer-Paid Premiums for Income Replacement Insurance in Employees' Taxable Income

 

Option 9 Include Investment Income from Life Insurance and Annuities in Taxable Income

 

Option 10 Tax Carried Interest as Ordinary Income

 

Option 11 Tax Social Security and Railroad Retirement Benefits in the Same Way That Distributions from Defined-Benefit Pensions Are Taxed

 

Option 12 Reduce Limits on Contributions to Retirement Plans

 

Option 13 Replace the Tax Exclusion for Interest Income on State and Local Bonds with a Direct Subsidy for the Issuer

 

Individual Income Tax Credits

 

Option 14 Modify or Eliminate the Child Tax Credit

 

Option 15 Eliminate Certain Tax Preferences for Education Expenses

 

Social Security Payroll Tax

 

Option 16 Increase the Maximum Taxable Earnings for the Social Security Payroll Tax

 

Option 17 Expand Social Security Coverage to Include Newly Hired State and

Local Government Employees

 

Corporate Income Tax Rates

 

Option 18 Increase Corporate Income Tax Rates by 1 Percentage Point

 

Option 19 Set the Corporate Income Tax Rate at 35 Percent for All Corporations

 

Taxation of Income from Businesses and Other Entities

 

Option 20 Repeal the "LIFO" and "Lower of Cost or Market" Inventory Accounting Methods

 

Option 21 End the Expensing of Exploration and Development Costs for Extractive Industries

 

Option 22 Extend the Period for Depreciating the Cost of Certain Investments

 

Option 23 Repeal the Deduction for Domestic Production Activities

 

Taxation of Income from Worldwide Business Activity

 

Option 24 Eliminate the Source-Rules Exception for Exports

 

Option 25 Tax the Worldwide Income of U.S. Corporations As It Is Earned

 

Option 26 Exempt Active Foreign Dividends from U.S. Taxation and Change the Tax Treatment of Overhead Expenses

 

Consumption Taxes and Excise Taxes

 

Option 27 Impose a 5 Percent Value-Added Tax

 

Option 28 Increase Excise Taxes on Motor Fuels by 25 Cents

 

Option 29 Increase All Taxes on Alcoholic Beverages to $16 per Proof Gallon

 

Health Care Provisions

 

Option 30 Accelerate and Modify the Excise Tax on High-Cost Health Care Coverage

 

Option 31 Increase the Payroll Tax Rate for Medicare Hospital Insurance by 1 Percentage Point

 

Option 32 Repeal the Individual Health Insurance Mandate

 

Other Taxes and Fees

Option 33 Impose a Fee on Large Financial Institutions

 

Option 34 Reinstate the Superfund Taxes

 

Option 35 Impose a Price on Emissions of Greenhouse Gases

 

Options That Would Increase the Deficit

 

Option A-1 Permanently Extend the Individual Income Tax Provisions of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010

 

Option A-2 Provide Relief from the Individual Alternative Minimum Tax

 

Option A-3 Modify Estate and Gift Taxes

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