Robert Rubin, former U.S. Treasury secretary and a co-chairman of the Council on Foreign Relations, wrote an op-ed in The New York Times on Tuesday declaring that a plan to reduce the deficit by eliminating certain tax deductions would not work.
As Congress returns on Tuesday for its lame-duck session, it must deal with the so-called “fiscal cliff,” a combination of spending cuts and tax increases scheduled to go into effect Jan. 1 if Congress does not act. Lawmakers are considering a proposal that would theoretically reduce tax rates and contribute revenue to deficit reduction by reducing or eliminating certain tax deductions.
But, Rubin writes, not only do many people rely on these popular programs – for instance, deductions for mortgage interest and charitable contributions – but the elimination of such provisions would not be sufficient to simultaneously reduce tax rates and cut the deficit.
Rubin wrote that the proposal poses “a serious risk to achieving the very objective” it seeks to carry out.
“If we invest too much time and effort pursuing plans that ultimately prove undesirable and unworkable, we may go down a road that leads nowhere,” Rubin writes. “In effect, we will have pursued the policy equivalent of a wild-goose chase only to discover that, to mix metaphors, the tax expenditure goose doesn’t have enough golden eggs.”
Rubin suggests that lawmakers let the Bush tax cuts expire for the wealthiest Americans, put in place spending cuts “equally matched” by revenue hikes, and set in motion an “achievable, progressive” program of reductions in tax expenditures.