How Obama Can Make the Tax System More Progressive

Ike Brannon argues that President Obama should propose “a radical tax reform that goes far beyond what’s currently being contemplated by congressional Republicans.”

“Along with reducing the tax break for inherited wealth — an idea already floated by the White House — it would include eliminating the deduction for mortgage interest as well as state and local taxes while also capping the deductibility of charitable contributions and retirement savings. The proposal would also have a much lower cap for the deductibility of employer-provided health insurance than the one coming down the pike and eliminate lower tax rates for carried interest as well.”

“These tax deductions (actually, all tax deductions for that matter) go overwhelmingly to the wealthy… The problem is that most deductions have large lobbies dedicated to protecting them. If Senate Finance Chair Orrin Hatch (R-Utah) or Ways and Means Chair Paul Ryan (R-Wis.) were to propose these reductions, congressional Democrats would allege they are harming the middle class with their cuts and lobbyists would reward them for doing so. But if it’s the White House that’s proposing it, Messrs. Ryan and Hatch would leap at the deal and work furiously to round up votes, knowing there is no other way to come up with enough rid tax expenditure savings to finance anything worthy of being called a ‘fundamental’ tax reform.”

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