Tuesday, May 21, 2013
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The president's plan, unfortunately, is inadequate and unfair. It would raise only $21 billion if applied to 2013 and about $300 billion over the next decade. That's less than one-sixth of the deficit reduction achieved by a 2 percent cap on tax benefits.
And virtually all of that money would come from taxpayers earning more than $200,000. Any serious plan to reduce government spending that is built into tax law should raise more revenue and call on most taxpayers to participate.
Tax reform can play a key role in reducing future budget deficits and in making tax law simpler, fairer and more supportive of stronger economic growth. Republicans should recognize that limits on tax subsidies are reductions in government spending. And if Republicans agree to a substantial revenue increase in this way, Democrats should agree to significant structural changes to slow the growth of Social Security and Medicare.
The key to breaking the fiscal impasse is to reduce the government spending done through the tax code.
Martin Feldstein, a professor of economics at Harvard University and president emeritus of the nonprofit National Bureau of Economic Research, was chairman of the Council of Economic Advisers from 1982 to 1984. This column was distributed by The Washington Post, where it first appeared.