Deficit Reduction and Tax Policy
By Arnold Kling
Why, for example, are tax cuts included in a proposal to reduce the national debt? That makes no sense at all except as an attempt to impose a particular ideology on the tax code.
For decades, economists have suggested broadening the tax base while reducing marginal disincentives. Tax reform of this sort is typically popular with economists of all political persuasions. We see it as a “win, win.” It can bring in more revenues (which the Bowles-Simpson plan would do) while promoting economic growth.
Thoma now characterizes this form of tax reform as ideologically charged. I would have thought that tax reform in order to reduce the deficit is about as centrist an economic policy as one could propose.
But the center is not what it used to be.