Saturday, November 20, 2010

How I won the NYT deficit game.

The NYT counts removing a tax deduction as a tax increase, but many tax deductions and credits (such as the mortgage interest deduction) act as subsidies; it is at least as legitimate to call an to such a subsidy a spending cut.

As far as tax code in general goes, I favour reducing marginal rates and eliminating most tax deductions and credits. Exceptions include the EITC and child tax credit. The three highest priorities for elimination are the employer-provided health insurance deduction, the state income tax deduction, and the mortgage interest deduction. I also reluctantly support broadening the tax base (VAT, carbon, etc). Such taxes will hurt the economy less than income taxes (per dollar of revenue raised). According to the NYT, my plan would produce a long term surplus that could be used to pay for reducing marginal rates even further.

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