Many industrialized countries face significant medium-term fiscal deficits and unsustainable long-term fiscal trajectories. The recent fiscal crises in Greece and other countries are a stark reminder of the costs of ignoring these issues. The looming fiscal shortfalls and borrowing requirements they create are unprecedented. Restoring fiscal balance will demand a reworking of the fundamental, implicit or explicit social contracts in industrialized countries. More prosaically, the problem will be solved by some combination of spending reductions and revenue increases. In this paper, we focus on the challenges and opportunities that the fiscal problem creates for raising revenues and reforming taxation.
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