Raising Revenue by Limiting Tax Expenditures

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The prospect of very large future deficits and a rapidly increasing national debt is an important fiscal challenge for the U.S. Limiting those deficits and therefore the growth of the national debt requires slowing the growth of the retirement and health programs. Additional tax revenue could contribute to that process. Limiting tax expenditures would raise revenue without increasing marginal tax rates. It would also be equivalent to reducing government spending now done as subsidies through the tax code for a wide range of household spending and income. An effective way of limiting tax expenditures would be a cap on the total tax reduction in tax liabilities that each individual can achieve by the use of deductions and exclusions.