Tax Reform Timidity
By Arnold Kling
The New York Times’ Daniel Altman describes the state of the income tax code.
Washington managed to hack through much of the underbrush of the tax code in an overhaul that President Ronald Reagan signed into law in 1986. But in the years after, lawmakers started adding dozens of provisions to the individual and corporate income tax systems, contributing to their complexity and helping the tax preparation industry grow into an even larger business.
because overprotected minorities enjoy privileged access to politicians, it is no surprise that deregulation incites so much fierce–and effective–opposition…
Is there a way to weaken this opposition? What if a government, instead … unleashed an economic “big bang,” trying to liberalize most markets at once?
Broad-based reforms, such as NAFTA, the 1986 tax reform program, and the commission to close military bases, are more effective than narrow measures. Piecemeal proposals mobilize the opposition of narrow interest groups. It is easier to neutralize such opposition with “big bang” approaches.
In this interview, CEA Chairman Glenn Hubbard talks about the context for the proposal to eliminate double taxation of dividends.
This wasn’t a big picture discussion of tax reform, it was a response to perceived weaknesses in investment in the economy now.
For discussion: Is the dividend tax cut proposal enough of a “big bang” to capture broad public support, or will it become a special interest “Christmas tree” on the way to passage?