Monday, September 18, 2017

tax reform: this ain't 1981

An exceedingly helpful piece on tax reform-- then and now. The economy and the problems with the tax code were completely different in 1981. So, the ideal solutions are unlikely to be the same as they were then.

Reagan lowered rates on the wealthy and increased revenues from the wealthy, given where we were on the Laffer Curve. This would not take place today. So, cutting rates should not be a high priority.

FICA is a *far* bigger deal today, but Dem politicians enjoy crushing the working poor and middle class with taxes on income, preferring to use SS and FICA as a way to score cheap political points.

Corporate taxes are a far bigger deal today, especially with the always-increasing prospects of capital flight in a global economy. A lot of Dems will probably demagogue this too. But for the sake of the economy and workers, hopefully the GOP will be joined by some Dems who will have the intellect and the courage to improve things here.

A strange omission: I wish the author had mentioned tax simplification and eliminating loopholes. It's relatively easy to make a strong case in terms of both equity and efficiency. But gutless or corrupt politicians, along with interest group power, are likely to preserve that mess.


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