Federal tax reform

Abstract

What is the problem? The federal tax system in the U.S. is inefficient, overly complicated, unlikely to be able to cover rising federal expenditures in the long run, and may constrain economic growth. What are possible interventions? Fundamental income tax reforms, including shifting the tax base to consumption or broadening the income tax base by eliminating many tax expenditures, may increase rates of economic growth and help address long-run fiscal issues. Smaller adjustments to federal tax policy may also have substantial benefits. These reforms face several political obstacles, and we do not have a strong sense of how additional funding would be able to create policy change. Who else is working on it? Federal tax reform efforts attract significant attention from many think tanks and foundations, including the Tax Policy Center and the Peter G. Peterson Foundation, amongst others.