Sunday, January 22, 2012
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.