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How You'd Cut the Federal Deficit

You spoke up loud and clear. But is Washington listening?

for free or at reduced prices to children whose families are at or near federal poverty levels? Who would make sure that our foods and drugs are safe, and that we can effectively fight infectious diseases and the like?

5. Raise taxes

Lots of commenters argued that spending cuts alone aren't enough. And many of them went well beyond the revenue-raising options offered in the budget calculator, one of which was eliminating the tax cuts passed during the Bush administration.

Chief among the suggestions:

  • Close loopholes that allow many large U.S. companies to avoid paying any federal taxes. According to a recent article in the New York Times, for example, General Electric reported $14.2 billion in global profits in 2010 yet somehow came out not only owing nothing but claiming a tax credit of $3.2 billion. Eliminating business tax dodges might shave the deficit by as much as $450 billion, according to an analysis by Citizens for Tax Justice.
  • Abolish the capital gains tax — which, according to the Tax Foundation, can drop as low as 10 percent — and instead assessing income from the sale of real estate or stocks at the same rate as regular income. It's difficult to calculate exactly how much revenue this would raise, because it would be dependent upon the vagaries of the stock market. But based on this historical analysis, a reasonable assumption is that doubling the capital gains rate would pare the deficit by at least $50 billion.

Several commenters also advocated such things as a one-shot surcharge of 10 to 20 percent on the fortunes of extremely rich people; eliminating the cap on taxable social security income; taxing the

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