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Tuesday, February 26, 2013

Hamilton Project Hosts Program Today on Entitlements, Taxation, and Revenues in the Federal Budget

Hamilton ProjectThe Hamilton Project hosts a program today on Real Specifics: 15 Ways to Rethink the Federal Budget—Part II: Addressing Entitlements, Taxation, and Revenues:

Budget battles continue in Washington even after the White House and Congress cut a last-minute deal to avert the so-called “fiscal cliff.”  With the imminent threat of default removed for now, the next potential challenge to the economy could come from sequestration, set to go into effect on March 1.

The Hamilton Project asked experts from a variety of backgrounds—the policy world, academia, and the private sector—and from both sides of the political aisle, to provide innovative, pragmatic proposals for lowering the deficit by reducing expenditures or raising revenues, and that take into account impacts to the economy at large. 

The resulting 13 proposals range across budget groups, and include options to reduce mandatory and discretionary programs, to improve economic efficiency, and touch on topics as wide ranging as immigration, transportation, healthcare, and mortgage interest.  This diverse group of authors will convene in at a forum today in Washington, D.C. to discuss their ideas in a series of roundtable discussions.

Here are the tax-related panels:

Panel #2:  Innovative Approaches to Tax Reform:

Robert Greenstein (Center on Budget and Policy Priorities) (moderator)

  • Joseph E. Aldy (John F. Kennedy School of Government, Harvard University), Eliminating Fossil Fuel Subsidies:  "This paper looks at how limiting subsidies for fossil fuels could raise revenue for the federal government and while also benefiting the environment. It proposes the elimination of twelve tax provisions that subsidize the production of fossil fuels in the United States."
  • Karen Dynan (The Brookings Institution), Better Ways to Promote Saving through the Tax System:  "Government programs and tax provisions aimed at encouraging people to save are essential to promoting economic security, but can subsidize savings that would have occurred anyway. This paper examines the design of better savings programs, outlining how one could reform savingsrelated programs to increase security but lower budgetary cost."
  • Diane Lim (Pew Charitable Trusts), Limiting Individual Income Tax Expenditures: "This paper takes another approach to individual income tax expenditures, proposing an across-the-board reduction in deductions and exclusions rather than targeting specific provisions."
  • Alan Viard (American Enterprise Institute), Replacing the Home Mortgage Interest Deduction: "Tax reform discussions often end up calling for a broader base—eliminating or limiting tax exclusions and deductions that can distort taxpayer decisions. This paper addresses replacing the mortgage interest deduction with a refundable credit to raise revenue and improve the efficiency of the tax code."

Panel #3:  New Sources of Revenue and Efficiency:

Michael Greenstone (The Hamilton Project, The Brookings Institution) (moderator)

  • Tyler Duvall (McKinsey & Company), User Fees for Transportation Infrastructure:  "Investments in infrastructure are essential for a vital economy, but much of U.S. transportation infrastructure is in disrepair and overly congested. This paper looks to user fees as a way to raise revenues while also encouraging smarter use of infrastructure."
  • Bill Gale (The Brookings Institution) & Ben Harris (The Urban Institute), Creating an American Value-Added Tax:  "Creating a value-added tax (VAT) in the United States could help raise revenue in a manner that does not distort saving and investment choices, that makes our system more consistent with the rest of the world’s, and that has been proven to be feasible administratively. This paper considers how a VAT could contribute to a fiscal solution and discusses its design."
  • Adele Morris (The Brookings Institution), The Many Benefits of a Carbon Tax:  "A carbon tax could provide a new source of revenue while also addressing climate change more efficiently than many current regulations in place. This paper lays out a plan to implement a carbon tax while consolidating and limiting other regulations targeting climate change."
  • Pia Orrenius (Federal Reserve Bank of Dallas), Overhauling the Temporary Work Visa System:  "A simplified immigration system designed to meet the needs of the economy would allow the United States to maximize the many benefits of immigration. This paper explores how reforms to the employment-based immigration system could increase the economic benefits of immigration while also raising revenue by auctioning visas."
  • Phillip Swagel (School of Public Policy, University of Maryland), Increasing the Role of the Private Sector in Housing Finance:  "Government support for housing has allowed Americans to get mortgages and refinance at low interest rates, but it also leave taxpayers exposed to an immense amount of risk. This paper presents an overview of how changes in housing policies and reform of government-sponsored enterprises could contribute to budget savings as well as improve the distributional consequences and efficiency of federal housing policy."

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Comments

13 proposals but no hint of thinking about what to do if the government runs out of borrowing ability or how to reduce the chance of that happening. Nothing on rethinking the concept of promising expensive benefits to the middle class funded by the middle class. No questions about whether there is a maximum amount of revenue the government can extract from the economy without destroying it, and if so how close are we to the maximum. No concern that the government will be unable to cope with higher interest rates on its debt when they inevitably arrive.

The problem is orders of magnitude larger than these small-ball proposals.

Posted by: AMTbuff | Feb 26, 2013 2:06:41 PM