Tax Lawyer's Blog

William G. Gale of the Brookings Institute writes in an article titled Tax Reform Handcuffs that the tax policy chasm between Republicans and Democrats is too wide to be bridged:

The state of politicians’ discussion on taxes in this country is downright embarrassing and increasingly dangerous. One side says “no new taxes.” The other side says “no new taxes on the bottom 95 percent.” The way these two positions relate to tax reform is best captured by the phrase “you can’t get there from here.”

Then in a spirit of apparent neutrality Gale says that tax simplification should be the desired bi-partisan goal:

Every year the U.S. tax system becomes more complex. Making simplification a priority in tax reform is necessary because without such an action, the code will continue to become more complex.

He blows his cover, however, when he gives us this list of reform items:

Chief candidates here include repealing the AMT, consolidating saving incentives, consolidating education incentives, consolidating family subsidies, taxing dividends and capital gains at ordinary income tax rates (provided the top rates come down). (Emphasis Added)

Raising taxes on dividends and capital gains is the Democrats’ favorite backdoor method of taxing the rich, the wealthy being seen as the primary benefactors of these taxes.

I don’t know if it was intentional, but Mr. Gale has managed to sneak in a bit of idealogy while claiming to favor a bi-partisan effort to simplify the tax code.

I happen to agree with Mr. Gale about the need for across-the-board tax reform – the broadening of the tax base and the lowerering of tax rates - but I think it must coincide with an overriding plan of government reform.

It is irrational to expect taxpayers to agree to give more of their money to a government that has wasted so much of it in the past and continues to waste it in the present.

No matter how forcefully politicians proclaim that they will do wonderful things with these increased revenues, people will be reluctant to give the government more money until they become convinced that the money they have already given it is being used wisely.

Related Posts:

• Who Pays Taxes: Top 1% Pay More Than Bottom 95%
• Throw Money at It
• Taxes and Healthcare Reform: Asking or Forcing the Rich to Pay More

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