05-05-2011, 04:26 PM
I'm understanding the idea of deductions and credits as gov't spending in terms of opportunity cost. The gov't is sacrificing that revenue, therefore it has a cost which must be measured.
Reigning in deductions and credits is the most likely way that Congress will drive increased revenue, politically it's less risky than rate hikes.
However, the idea presented by Feldstein (who was a Reagan advisor) in this article is very regressive and would hurt the middle class. Notice he excludes 401K savings and capital gains from his plan. People in the $25K to $50K range can hardly afford another $1,000 in taxes. I don't see this going anywhere.
Reigning in deductions and credits is the most likely way that Congress will drive increased revenue, politically it's less risky than rate hikes.
However, the idea presented by Feldstein (who was a Reagan advisor) in this article is very regressive and would hurt the middle class. Notice he excludes 401K savings and capital gains from his plan. People in the $25K to $50K range can hardly afford another $1,000 in taxes. I don't see this going anywhere.