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OCR Page 1 of 42DEPARTMENT
THE
INI
THE
174"
DEPARTMENT OF THE TREASURY
washington, D.C.
SECRETARY OF THE TREASURY
December 2, 1998
CLOSE HOLD
MEMORANDUM FOR GENE SPERLING
DIRECTOR, NATIONAL ECONOMIC COUNCIL
FROM:
ROBERT E. RUBIN
SUBJECT:
Meeting on Tax Cut Options
An NEC process in coordination with Treasury staff has developed possible new tax cut options for
the President's budget. NEC-DPC sub-groups (Treasury, OMB, CEQ, OVP, and various agencies)
have been working on priority areas, including health, education and training, children and families,
empowerment, R & D, and pensions.
This meeting will focus on these new possible proposals and the context for their consideration.
Treasury has a number of concerns about many of these proposals, including questions about
administrability, marginal effect and social policy judgments. Moreover, as a more general matter,
we face serious budgetary and analytic resource constraints. Given what the Administration is
almost certainly committed to, there is little room for new proposals, especially if we decide to
support a fix to the marriage penalty.
In that context, we need to decide which, if any, of the new proposals to work on, bearing in mind
that such effort comes at the cost of work on other high priority issues, development of possible
raisers, revision of the tax baseline and issuance of regulatory guidance (which is always heavily
weighted toward year-end).
More generally, there is as always the broader question regarding the extent to which we should
focus on simplifying the tax code versus the extent to which we should pursue other social and
economic objectives at the expense of making the tax code more complex.
In light of the above considerations, we believe that the NEC Principals need to focus on the
following questions:
Should the budget include marriage penalty relief?
Should a share of tobacco receipts, if any, go to offset tax cuts?
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