Tax Nonsense

Andrew Stuttaford has a long nonsense post at the NRO Corner.  Fortunately he explains why in the first paragraph so you don’t have to read anymore.  Here is Andrew’s first paragraph.  We have comments in brackets.

True tax reform  [no other improvements are relevant] should aim to satisfy four main ‘fiscal’ principles: It should aim at a tax system that is flatter (with lower nominal rates), broader (as many people as possible should have skin in the game) [only relevant for individuals], simpler and, even allowing—as I would –for some supply side magic, it should be fiscally responsible.  As that final goal is extremely difficult to reconcile with those earlier principles without either truly brutal [nope, but likely to be portrayed as such] claw-backs in entitlements (not something I would favor [something we very much favor]) or (my very clear preference [us too]) some sort of federal VAT/GST/Sales tax, both political impossibilities for now [agree], the best that can be hoped for is that any change in the tax regime should not worsen the country’s (unattractive) long term financial condition by too much.

Then Andrew says the plan does great things by reducing corporate rates and eliminating AMT but he sadly informs us that it is not true tax reform.  If you are wiling to accept less than the full MWG plan,

Sidebar: The full MWG plan starts with the Graetz plan and reduces or eliminates a variety of taxes including corporate taxes, AMT, tariffs, and gas tax while adding VAT and carbon taxes.  We are not holding our breath.  End Sidebar.

as we are, then the question is does it improve the current system?  The answer, as Andrew seems to admit is yes it does improve the country’s long term financial condition by improving the business side.  We too would like more improvements on the individual side but it is unlikely to happen.  At some point there will be a binary choice.  As long as the GOP proposal includes “true” business tax reform we are going to support it.  Andrew could have just said that he was waiting for true tax reform from a true Scotsman and we would have understood it in one sentence.


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