A Blueprint for Tax Reform and Health Reform

Publication Date: April 2009

Publisher: Tax Policy Center

Author(s): Leonard E. Burman

Research Area: Banking and finance

Keywords: Federal Budgets & Fiscal Policy; Tax Distribution and Economic Trends; Taxes and Social Programs; General Tax Policy

Type: Paper

Abstract:

This paper outlines a plan for a VAT dedicated to paying for a new universal health insurance voucher combined with a vastly simplified and much flatter income tax. Top income tax rates could be cut to 25% or less and most taxpayers would not have to file returns. The health care voucher would offset the inherent regressivity of a VAT, since the voucher would be worth more than the VAT tax paid by most households. Moreover, with the VAT rate tied to health spending, the public would have a vested interest in reining in the growth of health care costs.