November 06, 2002
From the desk of Jane Galt:One of the exciting things
One of the exciting things about this is that there is a -- slim -- chance that we'll get tax simplification.
Peace, my little pinko chickadees. I don't mean lowering taxes on the rich. I just mean getting rid of the 8 zillion deductions we all take, lowering rates a little to compensate for the loss of deductions, and thus hopefully goosing the economy.
Now, lots of people argue whether or not raising taxes hurts or helps growth. Though intuitively, it seems obvious that lower taxes would translate directly into higher growth, the empirical evidence for this is thin on the ground.
But almost all economists would agree that a simpler tax code is a great thing for the economy. We spend over $300 billion in this country on tax compliance -- the cost of accountants and tax lawyers making sure our taxes are in order. That doesn't count the budget for the IRS, the courts, and the economic losses we take when companies and individuals divert resources into tax-favored activities.
The problem is, of course, that if they try to do it, the lobbyists will descend on Washington like a plague of locusts. Of course, in theory, we're all in favor of a simpler tax code -- but not at the expense of my deduction. Every single one of them will be fighting tooth and nail to prevent any deduction, no matter how minor, distortionary, and overall useless, from being cut. Unfortunately, while they're talking about making the reform revenue neutral -- meaning that it will neither raise nor lower taxes -- and keeping the current progressive structure, that doesn't mean that everyone will be exactly as well off as they were before. People without deductions, like (full disclosure) me, will be better off. People who take a lot of deductions will lose out.
The only way we can fight for this is by getting energized about it. I know, I know -- it sounds kind of like trying to get energized about proposed changes in the labeling standards for marshmallow fluff. But this is important. In economic terms, it's free money for the country -- we get to grow the economy, without costing ourselves, as a nation, any tax revenue. Even if it means you pay a couple hundred more every year, in the long run you'll be better off. And you'll have sent a powerful message about politicians using the tax code to buy off favored consituencies. So write your congressman. Tell any lobbying groups to lay off. Let the process run.
Come on, guys -- let's do it for America!
Posted by Jane Galt at November 6, 2002 12:07 PM | TrackBack | Technorati inbound links