On the Distributional Effects of Base-Broadening Income Tax Reform

This paper examines the tradeoffs among three competing goals that are inherent in a revenue-neutral income tax reform—maintaining tax revenues, ensuring a progressive tax system, and lowering marginal tax rates. As a motivating example, we estimate the degree to which individual income tax expenditures would have to be limited to achieve revenue neutrality under the individual income tax rates and other features advanced in presidential candidate Mitt Romneys tax plan, and how the required reductions in tax breaks could change the distribution of the tax burden across households. (We do...