Budget Options
CBO has just released its biannual report on Budget Options. The document is wonderfully useful to estimate the budget effects of numerous policy alternatives.
For example, if I am reading it correctly, we could increase the gasoline tax by $1 (see revenue option 48) and reduce all ordinary income tax rates, AMT rates, and dividend and capital gains rates by 2 percentage points (see revenue option 1) to produce an approximately revenue-neutral tax reform.
If that policy were already in place, would many people advocate raising income tax rates in order to lower the gas tax? I don't think so. Opposition to this proposed reform seems to be an example of status quo bias.
For example, if I am reading it correctly, we could increase the gasoline tax by $1 (see revenue option 48) and reduce all ordinary income tax rates, AMT rates, and dividend and capital gains rates by 2 percentage points (see revenue option 1) to produce an approximately revenue-neutral tax reform.
If that policy were already in place, would many people advocate raising income tax rates in order to lower the gas tax? I don't think so. Opposition to this proposed reform seems to be an example of status quo bias.
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