December 19, 2012
1986-Style Tax Reform Would Cement Obama's Legacy as a Transformational President
Tax fairness matters, but economic growth also is a priority. A growing economy is the best way to raise revenue for deficit and debt reduction. Otherwise we would have to raise taxes on the middle class or make truly drastic cuts in public spending.
To promote growth, most economists favor eliminating or limiting the preferences that honeycomb both the individual and corporate tax codes and distort economic decisions by steering investment toward activities favored by the government rather than markets. By reducing the effective tax rate on people and businesses, these preferences also keep upward pressure on rates, lest government revenues fall off. Conversely, closing loopholes enables the government to lower rates. ...
A sweeping, 1986-style tax reform next year—covering both corporate and personal taxes—would eclipse any short-term partisan victory Mr. Obama might win this year. It would promote economic growth, competitiveness, equity and simplicity while tempering the entitlement cuts that also will be necessary to reduce the nation's debt. Alongside his landmark health-care reform bill, tax reform would cement Mr. Obama's legacy as a transformational president.
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