There is considerable interest in cutting government spending in the putative pursuit of fiscal sustainability. Cutting funding to the IRS, however, greatly reduces revenue collected, far in excess of any savings.
Both candidates in the 2024 presidential election have expressed support for a tax exemption on tips. This report adds to the ongoing policy conversation by offering a quantitative look at several interpretations of the proposal, including its potential costs and down-stream consequences.
We analyze how and to what extent tax filers with similar incomes pay substantially different tax rates. This type of horizontal inequity is central to the perception that some people, particularly high earners, do not pay their "fair share" of taxes.
By simplifying the individual income tax code, fundamental tax reform can reduce the amount of time spent filing taxes without losing revenue or reducing progressivity.
