based source: either an increase in the income or payroll tax rate, or the addition of a new source such as a value-added tax.

In constructing a revenue option, it may be important to begin with a broad-based source, and supplement it with other sources to enhance progressivity, comprehensiveness, and growth potential. A payroll tax, for instance, is neither very progressive nor fully comprehensive. Other tax sources could be combined with a payroll tax increase, however, to bolster these missing attributes in a final revenue option.

Options can be developed by combining various revenue sources. In some instances, however, the combination of several sources could yield more-or less-than the sum of the components. This is particularly true of the income tax options.

Broadening the income tax base and raising the rates, for example, would probably yield more total revenues than implied by simply adding the two estimates. Combining two or more of the income tax rate changes, by contrast, might produce smaller revenues than implied by adding the estimated revenues.

Finally, care should be taken in generalizing these estimates beyond the amounts presented in the appendix. It is incorrect to assume, for instance, that doubling the increases in payroll or excise tax would yield twice the amount of revenue. Substantially

higher tax rates could cause behavioral changes that would result in smaller increases in revenue yields.

Appendix F illustrates various ways that revenue sources might be combined to finance Commission recommendations. Each option lists several revenue sources-including, in some instances, reductions in other spending areas-that could raise the money needed to finance implementation of the Commission's recommendations-about $70 billion to $75 billion.

Each option satisfies, in varying degrees, the Commission's criteria for judging potential revenue sources: progressivity, capacity for growth over time, and contributions from everyone. Each package also builds around a broad-based tax that raises most of the revenue. Other elements in the package were selected to compensate for shortcomings in the primary revenue source, as judged against the Commission's criteria. The analysis in Appendix F demonstrates how each package would apportion the financing burdens across people with different incomes, ages, family size, and other characteristics.

The Commission does not endorse a particular option or the elements that comprise the option. Other revenue sources or combinations might reasonably be considered. Rather, the Commission has presented options to illustrate alternative ways to raise the revenues needed for program implementation.