PWPP News: For Joint Select Committee

For Joint Select Committee
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Economic Policy Institute on October, 13, 2011 02:35:00

Progressive Revenue Proposals

By Andrew Fieldhouse | October 13, 2011
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As the Joint Select Committee on Deficit Reduction  negotiates the second phase
of deficit reduction under the Budget  Control Act, it is imperative that its
proposals include greater revenue  to equitably balance the sole focus on
spending cuts in the first  phase. President Obama has produced a set of
recommendations for the  committee that would balance additional spending cuts
and a winding down  of war spending with new revenues and fully financed job
creation  measures. This issue brief analyzes the revenue proposals in the 
president’s recommendations and offers a menu of alternative or  supplemental
progressive revenue options to reduce the deficit and/or  finance job creation
initiatives. As detailed in this brief:
*The president’s revenue recommendations for the joint committee mark  a step
toward revenue adequacy and a more equitable tax code relative  to current tax
policies by raising $1.3 trillion in new revenue over the  next decade relative
to current tax policies. 	*The president’s proposed tax changes would
predominantly affect the  top 5% of earners (with incomes above $227,000) while
cutting average  taxes for the bottom 60% of earners (with incomes below
$65,000). 	*The president’s revenue recommendations, however, fall $3.4
trillion  shy of projected revenue under current law. Revenue inadequacy and the
 Bush-era tax cuts remain prime drivers of budget deficits and are only 
partially addressed by the president’s recommendations. 	*Beyond the
president’s recommendations there remains substantial  scope for increasing
the progressivity of the tax code and raising  additional revenue to finance job
creation, ease budgetary pressures  elsewhere, and reduce deficits.
This brief also identifies eight progressive revenue policies that  could
complement the president’s recommendations and principles for tax  reform.
Collectively, these policies would also return revenue levels  roughly to those
scheduled under current law. These policies and their  associated revenue
relative to the president’s recommendations (over  2012-21) include:
*enacting a millionaire surcharge ($383 billion); 	*taxing capital gains as
ordinary income ($168 billion); 	*further limiting the tax benefit of itemized
deductions ($888 billion); 	*enacting a progressive estate tax ($73 billion);
	*enacting a financial speculation tax ($821 billion); 	*enacting a
cap-and-trade program and a refundable climate dividend ($472 billion);
	*enacting a sweetened beverage tax ($184 billion); and 	*ending the deferral of
foreign corporate income ($114 billion).
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