Sooner or later, the U.S. government will find it necessary to look for fresh revenue to fund itself, as keeping marginal rates low and the tax base as broad as possible will fall short, said former Treasury Secretary Lawrence Summers.
“It has to be our central priority looking to the future to raise more revenue than we’re now raising from the tax code. We’re now raising less revenue from the tax code than any time in the last 50 years,” Summers told CNBC.
An aging population that will live longer than past generations and will require more medical services will increase healthcare costs. As healthcare costs rise, so will the country’s debt burdens, and current rock-bottom interest rates won’t stay low forever, he noted.
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Calls by GOP presidential candidate Mitt Romney to cut taxes and do away with loopholes won’t provide the revenue the government will need going forward.
“We’ve got to do whatever we’re going to do with taxes in a way that’s consistent with the country’s finances staying stable and I think the aspiration to avoid ever seeing the top tax rate go up that Gov. Romney has proposed is just not realistic at all,” Summers said.
“I’m not for class warfare, I’m not for any new program of redistribution, but I am for recognizing that when there’s a group in the population that has seen its incomes go up the most and has seen its taxes go down the most that if you’re looking for increased revenue that’s a place you got to start.”
Romney himself, however, has said that Americans shouldn’t expect big tax cuts if he is elected, as the government will need revenue.
“Our individual income taxes are ones I want to reform, make them simpler. I want to bring the rates down,” Romney said in Ohio, according to the National Journal.
“By the way, don’t be expecting a huge cut in taxes because I’m also going to lower deductions and exemptions. But by bringing rates down, we’ll be able to let small businesses keep more of their money so they can hire more people.”
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