How Our Broken Tax System Drives the Economy

Rear view of the Treasury Department building ...

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The Benefit and the Burden: Tax Reform – Why We Need it and What it Will Take, Author: Bruce Bartlett

By Henry J. Aaron – Bruce Bartlett joins a long list of critics who point to the needless complexity of the current income tax. He documents the damage to economic efficiency resulting from an Amazon jungle of special tax provisions. He explains the unfairness resulting from countless provisions justified as increasing fairness. He blames both parties, faulting Presidents Obama and Bush (the second) for contributing to the current mess by advocating narrowly targeted provisions which Congress unwisely approved.

Scolding fellow conservatives is not what this book is primarily about. Most of it is about the myriad and irrational ways the tax system influences just about everything — how much housing we buy, how we pay for our health care, who gives how much to what charities, and on and on. Part of the reason for the deterioration of tax policy, Bartlett suggests, is the reduced role of the Treasury Department’s once-formidable Office of Tax Analysis, which at one time bestrode tax policy. But, as Bartlett points out with devastating clarity, the blame mostly lies elsewhere. The tax system was comparatively simple immediately after enactment of the Tax Reform Act of 1986. Most of the superb professionals who had staffed the OTA for decades and who drafted TRA 86 were still in place. Creeping clutter took over the Internal Revenue Code, not because OTA staff relaxed vigilance or decamped for well-paying jobs elsewhere, but because successive presidents and members of Congress of both parties wanted to use government to accomplish objectives they (or their campaign contributors) deemed worth doing, but were afraid to be charged with abetting “big government.” After all, spending equals big government, and cutting taxes shrinks government. Right? more>

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