I recommend a highly readable book by tax experts Joel Slemrod and Jon Bakija: Taxing Ourselves: A Citizen’s Guide to the Debate over Taxes. (Click on this link or the book’s cover, at right, to jump to Amazon.)
I mentioned this book yesterday, noting that the authors caution us to recognize that all decisions about tax policy are ultimately and finally questions of values and ethical judgments. We have to make our own judgments about what is fair, what goals should be pursued, what tradeoffs we are willing to make. In the process, we need to ask the right questions about any proposed change in tax policy. To that end, the last chapter of Taxing Ourselves is a voter’s guide to help us do just that.
A few key points from this voter’s guide:
Q: What’s the real objective behind a proposed tax policy? Tax cuts, for example, are Trojan Horses, the authors say: “For many advocates of tax cuts, the real objective is not the tax system but the size of government, and tax cuts are really a tactical weapon in the battle to downsize government.”
Q: Are simple tax systems too good to be true? There isn’t a simple tax system. Even a flat-tax policy wouldn’t be simple once it moved from idea to practice. “The devil is in the details,” write Slemrod and Bakija. For example, any tax system needs rules and regulations and enforcement agencies. The simple becomes complicated, so don’t be fooled by claims of simplicity.
Q: Can a tax system encourage everything? Politicians will sell the idea of a tax break because it encourages or rewards “some laudable activity, such as housing, charity, or savings.” Who could be against that? But, warn the authors, any tax break that encourages one thing will discourage another. Any tax break that rewards one activity will penalize another.
Q: Is the status quo better than some alternative? The answer is no. “The U.S. tax system can be made simpler,” conclude Slemrod and Bakija. “It can be made fairer. It can be made more conducive to economic growth.”
Which way would you like tax reform to go?
What changes would best reflect your values?
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Originally published at www.OurValues.org, an online experiment in civil dialogue on American values.