Tax and Spending Reform for Fiscal Stability and Economic Growth

AEI Economic Perspectives, May 2015

16 Pages Posted: 6 Jan 2016

See all articles by Joseph Antos

Joseph Antos

American Enterprise Institute (AEI)

Andrew G. Biggs

American Enterprise Institute

Alex Brill

American Enterprise Institute (AEI)

Alan D. Viard

American Enterprise Institute

Date Written: May 2015

Abstract

Recognizing the unsustainable fiscal outlook facing the United States, the authors present a plan to constrain the growth of federal spending and reform the tax system to promote economic growth. The plan replaces the income tax system with a progressive consumption tax, eliminating the bias against savings and investment. The plan revamps Social Security to provide a flat, universal benefit that would virtually eliminate poverty in old age, making the program more effective in protecting low earners, more conducive to saving and longer work lives, and better aligned with the work and retirement conditions that will prevail in the coming decades. Additionally, the plan adopts health reforms that are intended to slow the growth of spending while maintaining access to high-quality health services, by shifting away from the defined-benefit approach that characterizes Medicare and Medicaid today to a defined-contribution philosophy. The plan also brings federal spending and revenue into closer alignment, sparing future generations from the explosive growth of federal debt.

Keywords: tax, budget, Social Security, Medicare, Medicaid, progressive consumption tax

Suggested Citation

Antos, Joseph and Biggs, Andrew G. and Brill, Alex and Viard, Alan D., Tax and Spending Reform for Fiscal Stability and Economic Growth (May 2015). AEI Economic Perspectives, May 2015. Available at SSRN: https://ssrn.com/abstract=2710963

Joseph Antos

American Enterprise Institute (AEI) ( email )

1150 17th Street, N.W.
Washington, DC 20036
United States

Andrew G. Biggs

American Enterprise Institute ( email )

1150 17th Street N.W.
Washington, DC 20036
United States
202-862-5841 (Phone)

HOME PAGE: http://www.aei.org

Alex Brill

American Enterprise Institute (AEI) ( email )

1150 17th Street, N.W.
Washington, DC 20036
United States

Alan D. Viard (Contact Author)

American Enterprise Institute ( email )

1150 17th Street, N.W.
Washington, DC 20036
United States
(202) 419-5202 (Phone)
(202) 862-7177 (Fax)

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