Rather Than Raise Tax Rates, Close Tax Loopholes

Suggestions that Republicans should allow the top federal individual tax rate to revert from 37 percent to 39.6 percent have sparked significant debate within the party as negotiations continue over how to fund the renewal of the Tax Cuts and Jobs Act (TCJA). While adjusting tax rates is one way to raise revenue, policymakers should seriously consider alternative methods that avoid the economic risks associated with higher marginal rates.