NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Raising Revenue by Limiting Tax Expenditures

Martin S. Feldstein

NBER Working Paper No. 20672
Issued in November 2014
NBER Program(s):Public Economics

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.

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Document Object Identifier (DOI): 10.3386/w20672

Published: Raising Revenue by Limiting Tax Expenditures, Martin Feldstein. in Tax Policy and the Economy, Volume 29, Brown. 2015

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