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Raising Revenue by Limiting Tax Expenditures

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  • Martin S. Feldstein

Abstract

Limiting tax expenditures can raise revenue without increasing marginal tax rates. Such a policy is equivalent to reducing government spending now done as subsidies through the tax code for a wide range of household spending and income. This paper explores one way of limiting tax expenditures: a cap on the total reduction in tax liabilities that each individual can achieve by the use of deductions and exclusions. The analysis describes the revenue effects and the distributional consequences of such a cap, and examines the sensitivity of these results to various design features.

Suggested Citation

  • Martin S. Feldstein, 2014. "Raising Revenue by Limiting Tax Expenditures," NBER Working Papers 20672, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:20672
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    1. Congressional Budget Office, 2014. "The 2014 Long-Term Budget Outlook," Reports 45471, Congressional Budget Office.
    2. Congressional Budget Office, 2014. "The 2014 Long-Term Budget Outlook," Reports 45471, Congressional Budget Office.
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    Cited by:

    1. Steven J. Davis, 2015. "Regulatory Complexity and Policy Uncertainty: Headwinds of Our Own Making," Economics Working Papers 15118, Hoover Institution, Stanford University.
    2. Salvador Barrios & Serena Fatica & Diego Martinez-Lopez & Gilles Mourre, 2018. "The Fiscal Effects of Work-related Tax Expenditures in Europe," Public Finance Review, , vol. 46(5), pages 793-820, September.
    3. Dabla-Norris, Era & Lima, Frederico, 2023. "Macroeconomic effects of tax rate and base changes: Evidence from fiscal consolidations," European Economic Review, Elsevier, vol. 153(C).
    4. Martin Fochmann & Frank Hechtner & Tobias Kölle & Michael Overesch, 2021. "Combating overreporting of deductions in tax returns: prefilling and restricting the deductibility of expenditures," Journal of Business Economics, Springer, vol. 91(7), pages 935-964, September.
    5. Rooney Patrick & Zarins Sasha & Bergdoll Jon & Osili Una, 2020. "The Impact of Five Different Tax Policy Changes on Household Giving in the United States," Nonprofit Policy Forum, De Gruyter, vol. 11(4), pages 1-18, December.
    6. Abdul Aziz Bin Karia, 2021. "Are there any turning points for external debt in Malaysia? Case of adaptive neuro-fuzzy inference systems model," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 10(1), pages 1-16, December.
    7. Marè, M.; & Porcelli, F.; & Vidoli, F.;, 2024. "Does private supply drive personal health choices? A spatial approach of health tax detractions at municipal level," Health, Econometrics and Data Group (HEDG) Working Papers 24/03, HEDG, c/o Department of Economics, University of York.
    8. Emile Cammeraat & Ernesto Crivelli, 2020. "Toward a Comprehensive Tax Reform for Italy," IMF Working Papers 2020/037, International Monetary Fund.

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    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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