A 59-page proposal from the co-chairmen of the White House’s deficit-reduction commission, which they labeled “The Moment of Truth,” calls for sweeping changes in how the country spends money and collects taxes.
Democrat Erskine Bowles and Republican Alan Simpson, who head the National Commission on Fiscal Responsibility and Reform, issued their final report in which they proposed changes that would affect almost everyone, from wage earners, to people who put gasoline in their cars or hope one day to collect Social Security, Medicare, or Medicaid. It would cut 200,000 federal government jobs by 2020, roughly 10% of the workforce, and trim defense spending.
The proposal would achieve nearly $4 trillion in deficit reduction through 2020, reduce the deficit to 2.3% of GDP by 2015, overhaul the tax code, cap government revenue at 21% of GDP and reduce debt to 40% of GDP by 2035, the co-chairmen said.
Among the major tax changes would be limiting mortgage interest deductions to a maximum mortgage of $500,000 on the primary residence only, treating dividend and capital gain income as ordinary income and providing certain credits as an offset to the lost deductions.
While this is a long way from becoming law, the potential impact is significant.
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