Question

What would you do to reduce the deficit?

Answer 1

Deficit reduction in the United States refers to taxation, government spending, and economic policy debates and proposals designed to reduce the Federal budget deficit.

Ways to Reduce the Deficit: The measures explained below aim at raise revenue and reduce spending in a fair way

1.Measures to Increase Government Revenues:

i) 1. Tax Increases:

a) Raise All Tax Rates on Ordinary Income by 1%

b) Increase Tax Rate on Long-Term Capital Gains and Dividends by 2%

c) Tax Social Security Benefits like pensions

d) Increase Corporate Taxes by 1-2%

e) Increase Excise Taxes on Fuel to 33- 35 Cents per Gallon

ii) Closing Tax Preferences (Loopholes):

a) Convert Mortgage Interest Deduction With a 15% Tax Credit

b) Eliminate Deduction for State and Local Taxes

c) Limit Annual Contributions to Retirement Plans

d) Limit Itemized Deductions for Individuals

e) Eliminate Tax Preferences for Education Expenses

2. Measures to Reduce Spending:

1. Reduce or Eliminate Subsidized Loans, Including Pell Grants, for Undergraduate College Students

2. Reduce Federal Pensions for Government Employees and Military Personnel

3. Reduce or Eliminate Benefits for Lower-Income Beneficiaries

4. Reduce the Number of Government Employees

5. Eliminate Space Exploration Programs