In testimony before the Senate Committee on Finance, AAF President Douglas Holtz-Eakin discusses issues related to the tax code, high-income individuals, and tax planning strategies.

His key points:

• The two most pressing policy problems are the poor pace of economic growth and the unsustainable federal budget outlook; these interact as deficits are a headwind to growth, but faster growth would improve the fiscal outlook.
• Deficit reduction should be dominated by slowing the growth of mandatory spending, while tax policy should be pro-growth with low taxes on saving, investment, and innovation.
• Differential taxation of alternative forms of capital income offers the greatest opportunities for tax avoidance and evasion; a pro-growth tax stance reduces risks of these behaviors.

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