President Obama was said to be pondering whether to make comprehensive tax reform a top legislative priority next year, but on Friday the White House stepped back from those comments.
We hope they go for it.
Simplifying the tax code would benefit all Americans and the economy.
According to The New York Times, the president has asked his economic team to review the parameters of possible reform by studying possible “options for closing loopholes and simplifying income taxes for corporations and individuals, though the study of the corporate tax system is farther along.”
There are many reasons we hope that the administration moves forward with comprehensive tax reform. A simplification of the code would be popular among voters of both parties. (The president could sure use some good news on that front.)
A successful bipartisan overhaul would be the first small step in rebuilding voter confidence in Washington. More importantly, simplification would save millions of households the hassle of wasting time and money wrestling with tax codes that have grown needlessly complex. By lowering these extraneous costs, individual filers and business owners would have more incentive to be in compliance.
A reform of the country’s tax code is long overdue. Over the years, a convoluted hodgepodge of deductions and exemptions have made life miserable for the average taxpayer but also has allowed some upper-income-earners to deftly manipulate the system. A flattened rate, without endless exemptions, is likely to increase revenue even if tax rates remain the same for the top bracket.
This approach has been embraced by the president’s debt-reduction commission. It’s a more equitable way to tax Americans.
But the president should not stop there. Many economists believe the U.S. corporate tax rates — which are some of the highest in the world — have been chasing capital investment and businesses out of the country. We hope that Washington will finally take a serious look at these rates. After all, the best way to generate tax revenue is economic growth.
With that said, we understand there are many embedded political forces and special interests that will resist any tax reform. But surely there is plenty of room for common ground between leaders of both parties. We also understand that the tax code is intricately tied to the far larger problems of exploding deficits and debt.
But just because the two are linked does not mean Washington must shy away from restructuring the infrastructure of tax policy. A more manageable tax structure, in fact, may help make future reform easier.
Certainly, one problem doesn’t have to wait for the other, because tax reform would mean immediate, tangible benefits for households and businesses across the country.
