May 8th, 2007

3 Reasons to Privilege Tax Reform Over Tax Relief

A version of this blog post appeared in Politico on May 8, 2007.

Another Tax Day has come and gone, but the Internal Revenue Service remains essentially unmoved and unchanged. Accordingly, instead of continuing to advocate tax relief, the right should focus its efforts on tax reform.

The Cleanse the Code Coalition is an excellent example of how this works. As John Berthoud, president of the National Taxpayers Union, has explained, while members of the coalition disagree sharply on specifics (for instance, whether the code should be more or less progressive), they all agree that the current system should be scrapped in favor of something “simpler, fairer and more transparent.”

Without wading into the question of whether the current code is unfair, there are three strong reasons why such tax reform should supersede tax relief.

1. Reform is more urgent. Compliance with the tax code’s ins and outs, especially if you’re self-employed, necessitates a significant expenditure of both time (which translates into lost productivity) and money (to pay an accountant to ascertain your particular loopholes).

2. Reform is less divisive, easier to identify with and thus easier to sell. By contrast, tax cuts are controversial always. There’s no one alive whom the current code—at 67,204 pages and with 1,638 forms—doesn’t irritate and frustrate. Columnist Deroy Murdock reminds us that USA Today recently picked four tax professionals to create returns for the imaginary Bailey family. The pros generated four different amounts of taxes the Baileys owed. Similarly, in 1998, Money magazine asked 46 tax experts to file for another hypothetical household. In return, readers received 46 different tax liability figures, varying from $34,240 to $68,912.

3. Reform is more important. In the same way that conservatives now emphasize the importance of judicial appointments (since federal judges receive lifetime tenure), we should seek changes that are permanent rather than temporary—changes that are so institutional they can’t be repealed by the stroke of a pen from the next president.

No Responses to “3 Reasons to Privilege Tax Reform Over Tax Relief”