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1 Scott Greenberg, Options for Broadening the U.S. Tax Base 1 (2015)

handle is hein.taxfoundation/opbustxb0001 and id is 1 raw text is: TAX FOUNDATION FISCAL FACT Nov. 2015 No. 492 The Tax Foundation is a 501(c)(3) non-partisan, non-profit research institution founded in 1937 to educate the public on tax policy. Based in Washington, DC, our economic and policy analysis is guided by the principles of sound tax policy: simplicity, neutrality, transparency, and stability. @2015 Tax Foundation Distributed under Creative Commons CC-BY NC 4.0 Editor, Melodie Bowler Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org Options for Broadening the U.S. Tax Base By Scott Greenberg Analyst Key Findings Broadening the U.S. tax base and using the revenues to lower marginal tax rates remains a sound template for tax reform. Moving to a broader tax base and lower rates would simplify the tax code, remove unfair preferences, and create economic growth. In recent tax reform proposals, policymakers have declined to pursue ambitious base-broadening measures, limiting their ability to cut tax rates. Three promising directions for broadening the U.S. tax base are ending the exclusion of employer-sponsored health insurance, removing the cap on the Social Security payroll tax, and capping itemized deductions at a fixed dollar level. Each of these options would have negative economic effects, if implemented without accompanying rate cuts. However, combined with marginal rate cuts, each would lead to economic growth. Together, all three options would raise enough revenue on a static basis to lower the corporate tax rate to 20 percent, the top rate on ordinary income to 29.5 percent, and the top rate on capital gains and dividends to 13 percent. Doing so would grow the U.S. economy by 6.0 percent over the long term.

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