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Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Sunday, January 22, 2012

Mankiw: Four Steps to a Better Tax System

New York Times op-ed, A Better Tax System (Assembly Instructions Included), by N. Gregory Mankiw (Harvard University, Department of Economics):

It's that time again. Start filing all those W-2s, 1099s and scraps of paper you’ll need for your annual tax return. No doubt, this isn’t your favorite activity. At some point, you may ask yourself whether there’s a better way.

There is. Economists who study public finance have long agreed with William E. Simon, the former Treasury secretary, who said that “the nation should have a tax system that looks like someone designed it on purpose.” Here are four principles of tax reform that most of those economists would endorse:

  • Broaden the Base and Lower the Rates
  • Tax Consumption Rather Than Income
  • Tax Bads Rather Than Goods
  • Keep It Simple, Stupid

Filling out tax returns will never be a delight. But if reform included simplification, the task might become a bit less onerous. And if a few accountants and tax lawyers were induced to become engineers and doctors instead, society will have moved a big step in the right direction.

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Tax filing is only complicated for a small number of people. The vast majority of Americans can complete their taxes in a number of minutes for very little cost.

Posted by: SenateTaxGuy | Jan 22, 2012 1:00:30 PM

Wow, just what we all needed, another non specific, non supported tax reform proposal to go with the 17,234 other non specific, non supported tax reform proposals. And this one quotes Hobbes from three centuries ago. Isn't there any more recent data or studies?

We need to have a new rule, that anyone proposing tax reform must do three things.

1. Set forth the specifics of the proposal
2. Set forth the revenue impact of the proposal, along with the assumptions in reaching that estimate.
3. Set out the tax shift impact on various income groups so that we can see who pays more and who pays less.

[Of course Mankiw does tell us these things about his proposal because he knows they involve a substantial shift of the tax burden to the middle income class]

If we don't adopt these rules stuff like this, regardless of the views of the authors are just wasting our time, along with wasting the electrons used to put this stuff on the internet.

Posted by: David R | Jan 22, 2012 2:32:39 PM

Broaden the tax base is code for raising taxes on the middle class and the poor.

Posted by: GaryD | Jan 23, 2012 3:40:26 AM