Wednesday, April 12, 2017
The Hill op-ed: What ‘Tax Reform' Really Means, by Edward Kleinbard (USC):
Like April flowers, talk of tax reform is blooming everywhere. The difficulty, though, is that when politicians these days say "tax reform," what they're really suggesting, and what people hear, is "tax cuts."
That's a big problem, because the truth is that the U.S. is already following a path of collecting inadequate tax revenues to fund the government we have, much less the one we need — and cutting out small programs like Meals on Wheels won't change that.
As baby boomers age, the number of Americans over the age of 65 compared to adult Americans under that age will increase by 50 percent. And with that increasing proportion of the elderly comes increased Social Security and Medicare spending obligations. The answer does not lie in abandoning these commitments, but rather in addressing our inadequate revenue base.
The reality is that the U.S. has the smallest total tax take as a percentage of our national income (GDP) of any large developed economy in the world, save South Korea, at about 26 percent of GDP, including state and local taxes. (Germany, by contrast, collects about 37 percent of its GDP in taxes.) Our top individual tax rates are not high by world norms, and those top brackets only bite at income levels much higher than where the top rates apply in many other countries. ...
[W]alking back the rash promises made for individual tax cuts to concentrate instead on revenue neutral corporate reform requires political courage — something with which our current Congress is not well endowed.