Tax Reform for Growth, Equity, and Revenue

Abstract

This article examines the fiscal outlook and tax reform options in the United States. The major conclusions include the following: the United States faces a substantial fiscal shortfall in the medium- and long term; both spending cuts and tax increases should contribute to the solution; tax increases need not do significant harm to economic growth; and there are sensible ways to both reform tax structure and raise revenues, including the redesign of tax expenditures, the creation of a value-added tax or a carbon tax, or an increase in the gasoline tax.