The Organisation for Economic Cooperation and Development yesterday published its annual Economic Survey of the United States.  Here is the tax discusison:

Tax Reform Would Enhance Efficiency.

On the revenue side, it may be difficult to sustain the recent reductions in marginal tax rates, while meeting the fiscal burden from entitlement programmes, although this would be clearly desirable. To the extent that revenues have to be raised, the tax base should be broadened, rather than reversing reductions in marginal tax rates. Since the comprehensive tax reform in 1986, which broadened tax bases and reduced marginal rates, most of the resulting gains in simplicity and efficiency have been lost through a renewed expansion in tax expenditures. To be sure, not all of them are undesirable. However, tax expenditures, which are distorting, ill targeted and ineffective, should be reduced or abolished. The President’s Advisory Panel for Federal Tax Reform has recommended, inter alia, that tax preferences for mortgage interest payments, employers’ contributions to health insurance plan premiums, and state and local tax payments should be reduced. But, in addition to the Panel’s proposals, consideration should also be given to shifting the tax burden from direct taxes to consumption based indirect taxes – such as a national sales tax or a value added tax. This would produce efficiency gains, including reducing disincentives to saving. Furthermore, higher taxation of carbon based energy consumption would help reduce greenhouse gas emissions.