Saturday, January 26, 2013
Financial Times: US Taxes: Certain as Death, Complicated as Hell:
From small businesses to large companies, and from liberal to conservative politicians, a sweeping consensus has emerged that America’s unwieldy tax system is outdated and in need of repair. ... The US tax code is under scrutiny as an international outlier that is unable to raise sufficient revenue at a time of big budgetary pressures – and is stifling America’s economic potential and competitiveness at a time when the country is desperately seeking to shift towards a faster recovery.
[I]ncome inequality has risen as middle-class wages have stagnated, and America’s dominance in the global market has been challenged by the rise of China and other emerging powers. Changes to the tax code are seen as part of the solution to these problems by many US politicians, economists and policy analysts, although it is unlikely that any overhaul can turn the tide in all those areas at once. ...
But the basic recipe for reform is set. It consists – as in 1986 – of lowering income tax rates while broadening the tax base and paying for the effort by eliminating or limiting certain tax breaks. Some of the groundwork has already been laid. Tax-writing committees in Congress and White House officials have been working on tax reform plans for the past two years. Those plans are ready to be dusted off the shelves when the time is right.
(Hat Tip: Ed Kleinbard.)