Testifying before the Senate Budget Committee on tax reform and deficit reduction, Center Executive Director Robert Greenstein stated recently that reforming tax expenditures — i.e., spending that is delivered through the tax code rather than through public programs — can reduce deficits, promote economic efficiency, and make the tax code more progressive at the same time. Here are some excerpts:
BEYOND THE NUMBERS
We’ve previously discussed how the House Republican proposal to cut $66 billion in non-security discretionary spending — everything from K-12 education to clean water funds to medical research — in the current fiscal year (2011) would affect millions of middle- and lower-income families in communities all across America.
With Congress likely to consider corporate tax reform this year, we’ve issued a report outlining the tests that a well-designed reform proposal should meet:
The report we released yesterday shows how the House Republican proposal for deep cuts in non-security discretionary programs would affect a number of important programs in the current fiscal year — 2011, which ends September 30. But the proposed cuts for job training and employment services would have serious consequences into the next fiscal year as well, because of how Congress typically funds the programs.
Jim Horney, our Director of Federal Fiscal Policy, has previously explained why House Republican leaders’ proposed cuts in non-security discretionary programs for the current fiscal year (2011) are deeper than they appear. Then yesterday, Jim and several of his colleagues issued a report that details the impact of those cuts, as reflected in a measure now on the House floor, in a number of specific areas, with state-by-state data.
Jim Horney, the Center’s Vice President for federal fiscal policy, discusses the President’s budget proposal.
The legislation that Senators Claire McCaskill (D-MO) and Bob Corker (R-TN) introduced this week to limit total federal spending to 20.6 percent of the Gross Domestic Product includes a new “sequestration” process — automatic spending cuts if the spending limit is exceeded — that has some features in common with those now used to enforce the pay-as-you-go law and that were part of the Gramm-Rudman-Hollings (GRH) law in the late 1980s. But the McCaskill-Corker sequestration is dramatically different in one key respect — it would potentially impose big cuts in entitlement programs such as Social Security, Medicare, and Medicaid.
David Leonhardt’s excellent piece in today’s New York Times explains that while the U.S. statutory corporate tax rate is relatively high, the amount that U.S. corporations actually pay in taxes — the effective tax rate — is much lower. A primary reason, he notes, is that our corporate code is riddled with tax preferences that significantly reduce many corporations’ taxes and have created wide disparities in effective tax rates across the economy.
We briefed reporters this afternoon about the new proposal from Senators Bob Corker (R-TN) and Claire McCaskill (D-MO) to limit total federal spending to 20.6 percent of GDP, the average from 1970 to 2008. Explaining why this proposal would force draconian cuts in Social Security, Medicare, and many other programs and make it harder for the nation to recover from recession, here’s some of what Paul Van de Water had to say: