Research Report Evaluating Broad-Based Approaches for Limiting Tax Expenditures
Eric Toder, Joseph Rosenberg, Amanda Eng
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This paper evaluates six options to achieve across-the-board reductions to a group of major exclusions and deductions in the income tax: (1) limiting their tax benefit to a maximum percentage of income, (2) imposing a fixed dollar cap, (3) reducing them by fixed-percentage amount, (4) limiting their tax saving to a maximum percentage of their dollar value, (5) replacing them with fixed rate refundable credits, and (6) including them in the base of the existing Alternative Minimum Tax (AMT). We discuss issues of design, implementation, and administration, and simulate the revenue, distributional, and incentive effects of the various options.
Research Areas Economic mobility and inequality Taxes and budgets
Tags Fiscal policy Individual taxes Federal budget and economy Campaigns, proposals, and reforms Federal tax issues and reform proposals