This article outlines six realities that will likely shape the policy response to the long-run fiscal imbalance. First, defense spending will likely continue trending downward as a share of GDP over the long run because defense needs do not rise proportionately to income, and defense will likely...

The Pease provision does not limit the benefits of making charitable contributions or other expenditures that give rise to itemized deductions. Instead, it raises effective marginal tax rates on adjusted gross income, as does the personal exemption phaseout. The Pease and PEP provisions are...

Recognizing the unsustainable fiscal outlook facing the United States, the authors present a plan to constrain the growth of federal spending and reform the tax system to promote economic growth. The plan replaces the income tax system with a progressive consumption tax, eliminating the bias...

On December 11, 2014, Senate Finance Committee member Benjamin L. Cardin, D-Md., introduced S. 3005, the Progressive Consumption Tax Act of 2014, which calls for the adoption of a 10 percent VAT. The adoption of a VAT would have far-reaching effects on the economy, including the Social Security...

Two Democratic presidential candidates, Senator Elizabeth Warren (D-Massachusetts) and Senator Bernie Sanders (I-Vermont), have proposed annual wealth taxes. Annual wealth taxes have been adopted in a number of European countries (many of which later repealed them), but not in the United States....

Tax increases cause the overall price level to rise if they are accommodated by the Federal Reserve. A tax increase is likely to be accommodated only if it significantly reduces the real wages employers are willing to pay, as would be true for the introduction of a large VAT or retail sales tax

It is widely recognized that the current U.S. corporate income tax is flawed, particularly in its treatment of foreign‐source income. These flaws are amplified by the high U.S. statutory tax rate. Unfortunately,current reform proposals fail to resolve the fundamental contradictions in the...

Brill, Satel, and Viard examine proposals to extend federal and state tobacco taxes to e-cigarettes. They conclude that e-cigarettes should not be subjected to tobacco taxes at this time, because the current medical evidence does not point to any significant adverse health effects

Recent studies assert that corporations receive a government subsidy by being allowed ordinary business expense deductions for payments of performance-based executive compensation. There is no subsidy, however, because the compensation payments do not receive any preferential tax treatment. The...