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The Politics of Tax Reform

Saturday, December 1, 2012
Complicated Roads
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The u.s. federal tax code is in desperate need of reform. In this year’s presidential election, both Republican nominee Mitt Romney and President Obama made corporate tax reform an issue in the campaigns, and it was one issue on which the candidates found more common ground than difference, with proposals for lower rates and a shift to — or, in the president’s case, at least openness to — a territorial corporate tax system. There is also broad agreement that the individual side of the U.S. tax code is in disarray. Setting aside the political arguments about who is or is not paying their fair share of income taxes, over the past decade, the U.S. has imposed on itself a regime of temporary tax policymaking. While a favorite statistic of would-be tax reformers is that there have been more than 15,000 changes to the tax code since the last overhaul of the federal income tax system in 1986,1 the defining characteristic of income tax policy in this country is captured by a 2011 publication from the Joint Committee on Taxation (jct). The jct document listed expiring federal tax provisions by year over the decade from 2010–20. Not including temporary disaster relief tax breaks, the three years beginning with 2010 saw the expiration of 31, 56, and 37 provisions of the federal tax code, respectively.2

Among the most perishable federal tax laws are the set of tax provisions extended by Congress yearby- year.

Among the most perishable federal tax laws are the set of tax provisions, primarily affecting businesses, which have earned the moniker “tax extenders” because Congress habitually extends them year-by-year. The tax extenders sit alongside the centerpiece of temporary tax policy in the U.S.: our current marginal rates on earned income. Enacted as a 10-year policy in 2001 during the George W. Bush administration, modified in 2003, and extended for two additional years in 2010 by President Obama and the Democratic 111th Congress, this tax policy has become a partisan flashpoint and a source of significant uncertainty for U.S. taxpayers. If the Bush (or Bush-Obama) tax rates are allowed to expire under current law at the end of the 2012 calendar year, the marginal rates on earned income will increase from 25, 28, 33, 35 percent to 28, 31, 36, and 39.6 percent, and the 10 percent tax bracket will be reinstated.

All this temporary tax policy making has culminated in more than three-dozen expiring tax provisions that form strata in what has come to be known as the fiscal cliff. The fiscal cliff is a set of federal fiscal policies, including tax increases, new taxes, and Medicare provider payment cuts enacted with the Affordable Care Act, along with impending cuts to national defense and discretionary spending enacted as part of the sequestration provisions of the Budget Control Act of 2012, that are scheduled to go into effect on January 1, 2013, or sometime during that year.

In addition to the marquee increases in marginal income tax rates, the fiscal cliff is comprised of a spate of other expiring tax provisions, including: the American Opportunity Tax Credit, the doubled Child Tax Credit (now $1000, up from $500 per child), enhanced refundability of the Child Tax Credit, expansion of the Earned Income Tax Credit (eitc), elimination of phase-outs for itemized deductions and personal exemptions, reduction in the marriage penalty, lower capital gains rates (15 percent instead of 20 percent), 15 percent dividend tax rate rather than taxation as ordinary income, and the estate tax reduction from 35 percent over $5 million reverting to 55 percent over $1 million. Together, the cost of all income tax provisions will be $110 billion for 2013, $340 billion for 2013–14, and $2.8 trillion for the ten-year period 2013–22. Add to that the expiration of the 2 percent payroll tax holiday (2013 cost: $90 billion) and a set of tax extenders including the r&e tax credit and the alcohol fuel tax credit ($30 billion in 2013, $455 billion from 2013 to 2022).3

In total, if all fiscal cliff provisions are allowed to expire or take effect, the Congressional Budget Office (cbo) estimates that the U.S. economy could contract by 2 percent of gdp, causing a mild recession.4 That prospect aside, the inconvenient truth of contemporary U.S. tax policy is that the country is trying to create sustained economic growth using temporary tax laws.

At the edge of the fiscal cliff, there is a sense that this is a rare moment of opportunity for major policy change.

At the edge of the fiscal cliff, there is a sense that this is a rare moment of opportunity for major policy change. In less lofty terms, there is the practical concern that building a legislative coalition for repair of any one part of this spit-and-baling-wire tax code will require offering up changes to many other parts of the law; the only way forward is to address the dysfunction of the entire tax code. And then there is the current conventional wisdom on Capitol Hill that holds that avoiding the fiscal cliff, or even lessening the policy changes associated with it, will require coming up with a sidecar deal that is a framework for deficit reduction. That budget deal would include a target number for increased federal tax revenue, and members of Congress would approach raising that revenue with an eye to comprehensive tax reform.

Most serious talk of comprehensive tax reform harkens to the last major overhaul of the U.S. tax code, the Tax Reform Act of 1986. The ensuing exercise in “lessons learned” tends toward a focus on bipartisanship and lawmakers who frustrated the efforts of lobbied interests. Yet, while a hagiographic legislative history of the 1986 law does provide us with useful lessons about the pursuit of major tax reform, there are important differences in today’s economic and political circumstances that mean that another round of tax reform should not be approached as 1986 Tax Reform Act version 2.0. As a model for tax reform in 2013 or 2014, the lessons about what made 1986 work are as often cautionary as exemplary. As we look over the edge of the fiscal cliff to a second Obama administration and the 113th Congress, today’s economic conditions and politics mean that another round of tax reform will not just be different; it will probably be more difficult to achieve.

Revenue neutrality?

The highest hurdle to building a lawmaking coalition for comprehensive tax reform is that today’s reformers do not begin their negotiations with a preexisting consensus on whether tax reform should raise additional revenue or be revenue neutral. To hew to the principle of revenue neutrality requires that the revised tax code bring in the same amount of revenue — no more, no less — as flowed to the U.S. Treasury under the earlier law. At the outset of the tax reform debate in 1985, the major players all signed on to the ultimate objective of revenue neutrality. Negotiations then proceeded within that set framework. The task ahead was how to redistribute the total tax burden.5

Today, the lines of argument are clear and largely, although not perfectly, partisan. Democrats on Capitol Hill have called for increased revenues to fund current spending levels, which drastically outstrip current revenues. Republicans, led by Senate Minority Leader Mitch McConnell and vocal members of the House Republican Conference, have assumed a public position that takes a hard line against additional revenue.

The Republicans’ negotiating position became more complicated in the days following the reelection of President Obama when House Speaker John Boehner signaled willingness to raise some revenue by closing loopholes in the tax code. But the gop’s ability to move from its stated opposition to revenue increases is hampered by a political force that was not at play in the 1980s: the Americans for Tax Reform (atr) Taxpayer Protection Pledge, also referred to as the Grover Norquist (the head of atr) pledge. With the pledge, candidates and officeholders commit to oppose any and all tax increases. In the words of the pledge, members of the U.S. House and Senate will: “One, oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses; and two, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.” According to atr, 258 members of the 113th Congress, including all Republicans save for Rep. Robert Andrews of New Jersey, have signed the pledge. Only sixteen House and six Senate Republicans have declined to sign the pledge to date.

Norquist reinforces the pledge with repeated public assurances that members of Congress who cast votes that atr (read: Norquist) deems a tax increase will find themselves subject to election year campaign ads and grassroots outreach that charge the lawmakers with breaking a promise on taxes. Although Norquist’s critics protest that the pledge binds legislators to Norquist rather than lawmakers to their constituents, the specter of atr’s response to a pledge violation undoubtedly hangs over tax policy negotiations in Washington, D.C.

The intensity of the disagreement about the importance of revenue neutrality versus the need for additional revenue is amplified by the scale of the budget deficits now run by the U.S. federal government. In the 1985 fiscal year, the federal budget deficit was $212 billion, that is, 5 percent of gdp.6 Contrast that with fiscal year 2012, in which the federal government ran a budget deficit of $1.1 trillion, 7 percent of gdp, and it was the fourth consecutive year that the federal budget deficit was more than $1 trillion dollars. As a percentage of gdp, the federal budget deficit declined from its 2011 level of 8.7 percent, but the 2012 deficit was the fourth highest share of gdp since 1946.7

Perhaps the more central political problem that impedes consensus building around the revenue target is the near extinction of the deficit hawks within the Republican party. Over the past several decades, and throughout the George W. Bush administrations (see: two rounds of tax cuts, creation of an entitlement program with the Medicare Part d prescription drug benefit, and two prolonged and unfunded wars in the Middle East), it is hard to find evidence of the effective efforts of deficit hawks in the gop.

Within the gop, the party leadership role on tax policy has been assumed by the supply-siders, who prioritize using tax policy as a tool to promote economic growth over taxation as a means of generating revenue to fund government activities and programs. The core defense of the supply-side approach is that recent history has demonstrably proven that the U.S. federal government has what appears to be an insatiable appetite for tax revenue. Accordingly, the guiding first principle of taxation is to set tax rates at levels that increase the private income produced by the economy.

Contrast this contemporary balance of power between supply-siders and deficit hawks with the history of tax policymaking during the first Reagan administration. When the first round of Reagan tax cuts, the Economic Recovery Tax Act, were passed in 1981, internal debates at the White House began shortly thereafter. Deficit hawks pushed back against the supply-siders, pointing to the most recent budget projections, post-tax cut, that showed increasing deficits. The legislative product of these Republican debates in the Reagan White House was the Tax Equity and Fiscal Responsibility Act (tefra) of 1982, which brought more tax revenue into the U.S. Treasury.

The general approach with tefra was threefold. First, the tax collection system was changed to bring more revenue into the Treasury by increasing compliance (e.g., tefra imposed withholding on interest and dividends, expanded information reporting, and increased penalties on non-compliance). Second, tax preferences were eliminated or their use was restricted (e.g., repeal of safe-harbor leasing, repeal of future acceleration of depreciation allowances, strengthening of individual minimum tax, and tightening of the completed contract accounting method of accounting rules). Third, some taxes were increased, including airport and airway trust fund taxes, cigarette and telephone excise taxes.8

None of this is to suggest, contrary to obvious fact, that the Reagan years were a model of fiscal restraint by the federal government. Instead, the unsettling conclusion is how far we have traveled even from the imperfection of 1980s fiscal policymaking.

Over the past several decades, it is hard to find evidence of the effective efforts of deficit hawks in the gop.

There is certainly a story to be told about the disappearance of the deficit hawks among the Democrats and the dwindling of the Blue Dog membership in the Democratic Caucus. But the dominance of the supply-side way of thinking in the Republican Party has, by itself, fueled the process of party polarization on taxation issues and created a wide gulf between Republicans and Democrats.

Another demonstration of supply-side influence is the growing adherence, on the Right, to dynamic scoring analysis of fiscal policy changes. As a consequence, it is arguable that the political Right’s general approach to tax policy is further to the right than it was in the 1980s. Dynamic scoring refers to an approach to forecasting the fiscal impacts of legislation that takes into account a broader range of changes in individuals’ and firms’ incentives and behavior, with a view to longer-term response to changes to the status quo by the overall economy. Advocates of dynamic scoring argue that the method, when done correctly, produces more accurate predictions of systemic response to change than a more simplified “static” analysis.

Under dynamic scoring, with its incorporation of broader economic effects, reductions in tax rates and the overall tax burden are usually forecast to produce higher rates of economic growth and, therefore, larger tax receipts than are estimated under more static methods of scoring.

Because dynamic scoring shows lower tax rates can produce tax revenue equal to or exceeding at status quo levels, the practical effect on tax politics of choosing dynamic over static scoring is to move preferred tax rates lower. The effect of this, then, is to move the preferred tax rates of the political Right further away from the preferred tax rates of the Left, even if the two groups could manage to agree on a revenue target.

The politics are complicated further because, under current law, the cbo is required to score, or estimate the cost and fiscal impact of legislation, based on a method of analysis that does take into account change in individual and firm behavior but does not include estimates of macroeconomic feedbacks. In other words, the cbo does not forecast whether a change in fiscal policy would affect gdp growth, which would, in turn, affect tax revenues. As we approach the threshold of major tax reform, advocates of dynamic scoring must decide whether to agree to proceed with the current, less dynamic model. If they want the revenue enhancement that comes with more dynamic scoring, they must fight an internal legislative battle to change the law that governs cbo practice before tax reform begins. In February 2012, the House took a step in this direction by passing H.R. 3582, which would require the cbo and the Joint Committee on Taxation (jdt) to prepare scores of major legislation that would incorporate estimates of how changes in tax policy would impact the overall economy and affect the size of the economy as measured by gdp.

Writing tax law

Agreement on the objective of either revenue neutrality or increased total tax revenue leads to another briar patch of policy choices. For all the guidance that the 1986 reforms can provide, today’s economic conditions, political debate, and changes in the tax code since 1986 have created circumstances markedly different from those leading up to the 1986 Tax Reform Act. Under these new circumstances, lawmakers do not enjoy the same flexibility to change rates, or modify or eliminate exemptions, exclusions, and deductions.

When assessing the specific policy choices ahead in tax reform, the starting point should be a decision about the relationship between the corporate and individual sides of the tax code in that reform effort. If both corporate and individual taxes will be reformed at the same time, as they were in 1986, what are the revenue targets for each side of the code and how will those revenue targets be coordinated with one another? In practical terms, will tax cuts on one side of the code be paid for by revenue increases on the other?

Taken by itself, reform of today’s corporate tax code is relatively straightforward in terms of both policy and politics. There is a broad, bipartisan consensus among economists and politicians that U.S. corporate tax system makes the U.S. uncompetitive in the global marketplace, so the corporate tax burden in the U.S must, as a general rule, be lessened.

But the often unacknowledged result of such reform to the corporate tax code is lower revenue on the corporate side, at least in the short run, as corporations enjoy a lower tax burden, including tax holidays for repatriated corporate income. The intended outcome of these lower rates is to produce stronger economic growth, which would produce higher tax receipts on both the corporate and individual side of the tax code under dynamic scoring. In at least the first few years of any cbo scoring estimates, however, it is most likely that corporate tax reform would generate less tax revenue than the existing corporate tax code.

The question then confronting lawmakers is whether they will set out to achieve revenue neutrality or increase revenue across the entire tax code by offsetting the lost revenue on the corporate side with revenue increases on the individual side. The latter approach means that reforms to the individual side of the code would not be revenue neutral overall. If lawmakers have embraced the goal of increased revenues across the entire tax code, this would require an especially heavy burden on individuals and businesses that pay taxes through the individual side of the code.

The question for lawmakers is whether they’ ll set out to achieve revenue neutrality or increase revenue across the tax code.

The dual treatment of the corporate and individual tax codes is a daunting challenge when assessed as a snapshot in political history. But is even more intimidating when one understands the approach taken in 1986. During the 1986 reforms, revenue neutrality was sought across both halves of the tax code taken together. The result was that corporations were projected to take a $120 billion tax hit over 5 years to help offset rate reductions on the individual side.9 Given the political rhetoric surrounding international competitiveness and the need to reduce the corporate tax burden, it seems unlikely that we will see the same balance across the tax code today as 1986.

The individual side of the tax code has its own political land mines, ones different from those of 1986. Four of the most difficult to legislate through or around are the capital gains rate, the home mortgage interest deduction (mid), the Alternative Minimum Tax (amt), and the Earned Income Tax Credit (eitc).

First, one lucrative (in terms of tax revenue) and politically appealing option to Democrats for raising revenue is an increase in the capital gains tax rates. In 1986, Reagan, along with House and Senate Republicans,
went along with a sizeable increase in the long-term capital gains top rate (jumping from 20 percent to 33 percent) in exchange for lower marginal rates on earned income. The blocking factor today comes from Republicans, who, by all accounts, consider an increase in capital gains rates anathema.

Second, the prolonged downturn in the U.S. housing market has increased the financial stakes for the housing lobby, led by realtors and home construction and related industries, and current American homeowners. In the near-term, a significant reduction of the mortgage interest deduction would be expected to bring down home values as new buyers would no longer price the tax deduction into the total cost of the home. In an already weak housing market, the prospect of buyers being able to afford less — and the general uncertainty produced — will provide strong incentives for housing-related industries to engage in Capital Hill lobbying and grassroots efforts to obstruct even a minor modification to the mid.

One should not underestimate the challenge of reforming this provision in the tax code even under much better economic circumstances. During the 1986 reforms, the mid was pared back, but the restriction took only multiple vacation homes off the table; interest on first and second homes remained deductible.

The individual side of the tax code has its own political land mines, ones different from those of 1986.

Third, the growing problem of the amt creeping downward to middle-income taxpayers, as it has over two decades, constrains the ability of lawmakers to use revenues tapped by closing loopholes to offset lower marginal tax rates. Originally intended to curb the extent to which high-income earners can use extensive deductions and exemptions to reduce their effective tax rate, the amt was never indexed for inflation. Congress has regularly passed “amt patches” to prevent the parallel tax rate system from falling too far down in the middle-income ranges. But any measures taken to either repatch or permanently modify the reach of the amt will reduce revenue under current law, and that foregone tax revenue will need to be collected through other means. In the fiscal cliff negotiations, fully patching the amt to shield middle-income households consistent with current policy (prior practice by Congress) will cost $125 billion for 2013 relative to current law. Over the decade from 2013–22, the total cost would be $1.7 trillion.

Fourth, after the 1986 reforms, Democrats were able to point to the expansion of the Earned Income Tax Credit (eitc) as one of their major legislative victories for the working poor. The 1986 tax reforms took millions of Americans off the tax rolls through the expansion of eitc eligibility. But it is difficult to imagine further expansion of the eitc program in 2013. The budgetary challenge is where to find the additional revenue for expansion when the pruning of eitc eligibility as well as the refundability of the tax credit will be eyed as sources of revenue. The low-hanging fruit of revenue generation would be to bring more Americans back onto the tax rolls through modifications to the tax code. That approach naturally follows from the rhetoric of many high-profile conservative and Tea Party leaders, who emphasize the fiscal burden of the high percentage of Americans who have paid no federal income tax in recent years. For some, calls to lower that percentage have taken on a sort of moral imperative. With these considerations in play, it seems highly unlikely that eitc expansion will be used to build the legislative majority for tax reform.

The state fiscal mess

Tax reform strategists will also need to take into account that the set of most-feasible policy choices are now determined, in part, by the budget woes of the U.S. states. The combination of unexpectedly low tax revenue as a result of the deep recession and slow recovery, along with increased demand for social services, especially Medicaid, and the public pension crisis, have led some state governments to pursue tax increases to address their budget shortfalls.

At the federal level, one source of revenue would be the elimination or modification of the deduction of state income tax from adjusted gross income. The jct reports that in 2010, the federal government’s total tax expenditure for state and local income, sales, and personal property tax deduction was more than $39 billion. jct estimates put foregone tax revenue from these deductions at $46 billion in 2012 and $54 billion for 2013.10  But if states also raise tax rates, the bite into state residents’ pocketbooks will be larger if state tax payments are no longer deductible. It seems reasonable to expect that members of Congress, especially those from high tax states, will be difficult to persuade on this aspect of tax reform.

The road ahead

As the strategic assessment of the political environment for tax reform continues, there are a set of questions that should shape our thinking about the likelihood of achieving comprehensive tax reform and what that reform could entail. Among them are:

Legislative language and skin-in-the-game. Is the legislative groundwork as firm in 2012 as in 1986? And, if not, how will that matter, if at all? Today’s tax reformers begin from the touchstone of the Simpson-Bowles deficit reduction plans, but beyond those proposals, little legislative language has been penned and dropped in the hopper. As of this essay’s publication, only Senator Ron Wyden (d-wy) has introduced a comprehensive tax reform bill. Co-sponsored by Senators Daniel Coats (r-in) and Mark Begich (d-ak), the Bipartisan Tax Fairness and Simplification Act of 2011 (S. 727) includes specific language about rates and the closing of loopholes. This bill stands in stark contrast to the pack of bills that have been introduced in the 112th House and Senate that are merely general calls for Congress to take up tax reform.

Compare this to the two years before passage of the 1986 reforms, when there were detailed plans from the Reagan Treasury department (the first plan, called Treasury I, was submitted to the president in late 1984) and five detailed reform bills from members of Congress of both parties. Although recent public attention during the 2012 presidential campaigns focused on the tax plan forwarded by Rep. Jack Kemp (r-ny) and Senator Robert Kasten (r-wi) as a model for the final 1986 reforms (that focus can be credited to the nomination of Kemp protégé Rep. Paul D. Ryan of Wisconsin to the Republican vice presidential slot), the tax bills of Senator Bill Bradley (d-nj) and Rep. Richard Gephardt (d-mo) also provided legislative language that was drawn on throughout the 1985–1986 reform debates. Just as important, if not more, is that Bradley and Gephardt had sought to build their reputations as leaders on tax reform and were motivated to work with the Reagan White House to bring a bill to the president’s desk.

Divided and conquered. On the corporate side of the code, are the corporate lobbyists as divided today as they were in 1986? The success of the 1986 reforms was rooted in the division within industries, e.g. big oil vs. smaller producers, large banks vs. small banks. With the political momentum running in the direction of reducing the corporate tax burden, offsetting those reductions will be easier if there are soft targets among the corporate interests.

Who’s rich? On the individual side of the code, where will Senate Democrats fall on the question of where “high earner” status begins? Democrats who represent Blue states with very high-income areas and high costs of living (e.g., California, Washington State, New York, Connecticut, New Jersey) will be cross-pressured to move the “high earner” threshold above the current line of $200,000/individual and $250,000/household. If these Democrats form a coalition with Republicans to set the high-income marker at $500,000 or $1 million, that will make it more difficult for President Obama to issue a credible veto threat. The House Democrats who feel these same cross-pressures will be useful to House Speaker John Boehner if Democratic votes are needed to get final passage on tax reform in that chamber.

From lose-lose to win-win?

Unlike in 1986, if tax reform happens in the next two years, it will likely be the revenue half of a larger budget deal that includes changes in discretionary spending growth and mandatory entitlement programs. The most important question ahead of us might be whether the prevailing view of a Grand Bargain on U.S fiscal policy can be shifted. Currently, the focus is on what both sides lose in the deal. Democrats would agree to modifications and spending reductions for entitlement programs while Republicans agree to tax increases.

For all the concessions on all sides, the 1986 tax reform deal was one that, overall, left each side to walk away from the negotiating table with more than they arrived. Democrats, led in the negotiations by House Ways and Means Chairman Dan Rostenkowski, a Democrat from Illinois, won the expansion of the eitc and a tax code that made it more difficult for the highest earners to pay very low tax rates or no taxes at all. Republicans achieved the goal of lower rates and a broader tax base, even though some taxes, such as the capital gains rate, were increased.

In these new negotiations, a Democratic White House could be crucial to bringing congressional Democrats, especially those in the Senate, on board for entitlement reforms. If the message out of the White House focuses on the preservation of these programs and the end to the intergenerational inequality perpetuated by their current design, then that side of the fiscal deal can be a victory for Democratic constituencies. President Obama’s support for entitlement program restructuring that raises payroll taxes and reduces benefits for some recipients by raising the eligibility age and changing the formula for calculating benefits would, at a minimum, give congressional Democrats political cover for voting for changes to these programs —  cover that, it should be noted, would have been sorely absent from a Romney White House. Had Romney won the presidency, Democrats would have had strong incentive to play the role of obstructionist, teeing up a campaign issue for the midterm elections of 2014 and the 2016 White House run.

The challenge for House and Senate Republicans is to refocus on the big win of a simpler, flatter, pro-growth tax code, instead of remaining stuck on retaining the current marginal tax rates on the highest earners. In the lame duck session of the 112th Congress, the negotiations over the tax burden for high earners offer Republicans an opportunity to voluntarily move away from the hard line defense of the top marginal tax rate.

That said, if President Obama, Speaker John Boehner, and Senate Minority Leader McConnell can agree to keep the current highest marginal rate while reducing specific tax preferences or enacting a cap on total tax deductions at a level designed to affect the highest earners, that would signal that both sides are ready to enter the long process of major tax code reform with a central focus on interests rather than positions.

1 The President’s Economic Recovery Advisory Board, “The Report on Tax Reform Options: Simplification, Compliance, and Corporate Taxation” (August 2010).

2 Staff of the Joint Committee on Taxation, “List of Expiring Federal Tax Provisions, 2010–2020,” jcx-2-11 (January 21, 2011).

3 “The Fiscal Impact of Policies that Expire or Activate in or After 2012,” Committee for a Responsible Federal Budget.

4 “Economic Effects of Reducing the Fiscal Restraint That Is Scheduled to Occur in 2013,” Congressional Budget Office (May 2012), and “Economic Effects of Policies Contributing to Fiscal Tightening in 2013,” Congressional Budget Office (November 2012).

5 Jeffrey H. Birnbaum and Alan S. Murray, Showdown at Gucci Gulch: Lawmakers, Lobbyists, and the Unlikely Triumph of Tax Reform (Vintage Books, 1988

6 Office of Management and Budget, “Fiscal Year 2013 Historical Tables, Budget of the U.S. Government.”

7 Congressional Budget Office, “Monthly Budget Review” (November 2012).

8 C. Eugene Steuerle, “Contemporary U.S. Tax Policy” (Urban Institute Press, 2004).

9 James M. Poterba, “Why Didn’t the Tax Reform Act of 1986 Raise Corporate Taxes?” nber Working Paper 3940 (December 1991).

10 Joint Committee on Taxation, “Estimates of Federal Tax Expenditures for Fiscal Years 2011–2015,” jcs-1-12 (January 17, 2012).