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How to raise revenues without raising taxes

Donald Marron -- as summarized by Pete Davis -- has some ideas:

1. Increase economic growth. Each percentage point of addition growth would add approximately $2.5 trillion to federal revenues over the next decade. That's real growth. A point of additional inflation raises revenues by a similar amount, but federal spending would rise about $3.0 trillion, so that doesn't work. Americans may work longer. We could allow more immigration, particularly of better educated immigrants, because they tend to pay more taxes than they consume benefits.

2. Cut tax expenditures. Many spending programs masquerade as tax incentives, often with perverse effects. For example, the home mortgage deduction rewards high income taxpayers, who would own a home anyway, for taking on more debt. Better to convert it to a credit so those on the cusp of owning a home would get more help.

By Ezra Klein  | October 11, 2010; 10:24 AM ET
Categories:  Taxes  
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Comments

I hear a lot about how the 'studies' show that tax cuts are the least effective way to stimulate the economy and that food stamps are the best with unemployment benefits being very good as well.

What I don't understand is why these studies aren't brought front and center during the debates on what to do. It seems like people are always allowed to claim tax cuts are better without anyone calling them out on it in a visible way.

How can we get more awareness of these studies that purport to show just what is the most cost effective way to allocate stimulus money?

Posted by: rpixley220 | October 11, 2010 11:05 AM | Report abuse

Your headline doen't reflect Marron's article - 3 of his 4 suggestions involve raising taxes, just not raising marginal income tax rates. (His 4th suggestion, raise economic growth, is presumably something which would be brought about the the GDP Fairy, since it is the only item for which he does not specify the mechanism by which it is to be accomplished.)

Basically Marron suggestion for raising more revenue is ... to raise more revenue. With brillant minds like this around, hard to see why we are still in the doldrums.

Also, to rppixley: The folks who are blocking the action needed to restart the economy don't give a hoot about studies. They believe in God, guns, and the GDP Fairy.

Posted by: guesswhosue | October 11, 2010 11:30 AM | Report abuse

Your headline doen't reflect Marron's article - 3 of his 4 suggestions involve raising taxes, just not raising marginal income tax rates. (His 4th suggestion, raise economic growth, is presumably something which would be brought about the the GDP Fairy, since it is the only item for which he does not specify the mechanism by which it is to be accomplished.)

Basically Marron suggestion for raising more revenue is ... to raise more revenue. With brillant minds like this around, hard to see why we are still in the doldrums.

Also, to rppixley: The folks who are blocking the action needed to restart the economy don't give a hoot about studies. They believe in God, guns, and the GDP Fairy.

Posted by: guesswhosue | October 11, 2010 11:30 AM | Report abuse

--*How to raise revenues without raising taxes

[...]

1. Increase economic growth. *--

Quick, someone email that to Obama.

Posted by: msoja | October 11, 2010 12:02 PM | Report abuse

Didn't you get the memo? Tax expenditures=tax cuts! Every good conservative knows that a non-refundable transfer added onto the tax system it counts as a tax cut, even if it doesn't make sense.

Posted by: tmorgan2 | October 11, 2010 12:10 PM | Report abuse

Please explain how raising taxes on high income taxpayers who own houses does not constitute raising taxes.

Posted by: ostap666 | October 11, 2010 12:28 PM | Report abuse

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