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This report by Policy Matters Ohio offers options for raising federal revenues to reduce debt without exacerbating poverty or inequality. It includes data on historical federal revenues and expenditures as a percentage of GDP and proposes measures such as enacting a financial speculation tax, repealing upper-income tax cuts, and imposing a wealth surtax. The analysis highlights the importance of a balanced approach that considers the impact on various income groups and stresses the need to avoid worsening poverty and inequality. For detailed recommendations and principles for the Super Committee, contact Wendy Patton at Policy Matters Ohio.
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Policy Matters Ohio Instructions for the Super Committee: a balanced approach to debt reduction That does not increase poverty or inequality Wendy Patton (614)221-4505 wpatton@policymattersohio.org www.policymattersohio.org
Federal revenues and expenditures over time as a percent of the economy (gross domestic product), 1940 - present Source: Policy Matters Ohio, based on Office of the Budget Historical Tables, Table 1.3— Summary of Receipts, Outlays, and Surpluses or Deficits (-) in Current Dollars, Constant (FY 2005) Dollars, and as Percentages of GDP: 1940–2016
Options to raise revenues over time 1. Enact a financial speculation tax Up to $1.3trillion[1] 2. Repeal the (upper income) Bush tax cuts $629 billion[2] 3. Tax capital gains and dividends like income Up to $950 billion[3] 4. Enact a wealth surtax Up to $748 billion[4] 5. Return the estate tax to 2001 levels $280 billion[5] 6. Limit Home Mortgage Interest Deduction to primary residence $12 billion[6] [1]Citizens’ Commission on Jobs, Deficits, and America’s Economic Future, Institute for America’s Future, pg. 26 [2]Investing in America’s Economy, Our Fiscal Future, pg. 35 [3]The Responsible Path Towards Investing in America, Congressional Black Caucus, pg. 2 [4]The First Step, Center for American Progress, pg. 16 [5]The People’s Budget, Congressional Progressive Caucus, pg. 9 [6]Investing in America’s Economy, Our Fiscal Future, pg. 33 Source: OMB Watch
Options to raise revenues (continued) 7. Enact a financial crisis responsibility fee (.15% of financial institution’s liabilities for entities over $50 billion) $90 billion[7] 8. Eliminate the deferral of income from US controlled foreign subsidiary corporations (tax US corporate foreign income as it is earned) $114 billion[8] 9. Eliminate itemized deductions for those making over $200,000 a year $410 billion[9] 10. Enact a carbon tax/ cap & trade tax Up to $846 billion[10] 11. Raise the gas tax Up to $600 billion[11] [7]Investing in America’s Economy, Our Fiscal Future, pg. 40 [8]Reducing the Deficit: Spending and Revenue Options, March 2011, Congressional Budget Office, pg. 186 [9]Living Within Our Means and Investing in the Future: The President’s Plan for Economic Growth and Deficit Reduction, Office of Management and Budget, pg. 47 [10]Investing in America’s Economy, Our Fiscal Future, pg. 38 [11]Investing in America’s Economy, Our Fiscal Future, pg. 42 Source: OMB Watch
Percentage change in after-tax income by income grouping, 1979-2007
Share of income growth captured by top 1% compared to bottom 90%
Trends in sources of federal receipts as a percent of the economy (gross domestic product)
Critical principles for the Super Committee • Take a balanced approach to debt reduction: Balance the $900 billion already cut with revenues. 2) Do no harm: Do not make poverty worse or inequality deeper
