Tax Reform Equals Bullshit

That is my translation of James Kwak's post:

In the Times this weekend, David Leonhardt has a generally good overview of the tax policy showdown that is scheduled for later this year, as the Bush tax cuts approach expiration on January 1. He outlines several of the central issues we face: “hypothetical solutions are a lot more popular than actual ones”; everyone says she wants tax reform, but the tax expenditures that would have to be eliminated are very popular; and any significant deficit solution will directly affect vast numbers of Americans.
I have a few differences with Leonhardt, however. First, after his colleagues David Brooks and James Stewart, he seems to have fallen briefly under the spell of Paul Ryan: “Mr. Ryan’s plan would cut the top rate to 25 percent, from 35 percent, and still leave overall tax collection roughly where it has been, by eliminating tax breaks.”
Paul Ryan has no tax reform plan. His bizarrely much-heralded “plan” is to cut tax rates to specific levels (25%, at the top end) and “broaden the tax base to keep revenue as a share of the economy at levels sufficient to fund critical missions that rightly belong in the domain of the federal government.” Nowhere does he say how he would broaden the tax base. This is a statement of an objective, not a plan.
As Leonhardt says, “What’s missing from these plans is any detail on which tax breaks would be eliminated”—which means they should be taken as political gambits, not as tax reform plans.

When Republicans bring up tax reform, what they mean is getting rid of tax expenditures which benefit rich folks and some in the middle class, while lowering the top marginal rates on the wealthy. In other words, they are trying to get the middle class and lower to pay more while still cutting taxes on the wealthy. Tax reform is the euphemism for reverse Robin Hood tax law changes.  Kwak spells out the Republican game here:

More importantly, Leonhardt propagates a misleading framing of tax reform:

“The notion of tax reform also has widespread support from economists, liberal and conservative. As they define it, reform would reduce marginal tax rates while eliminating or reducing various tax breaks.”

There’s no definitional reason why tax reform has to reduce marginal rates. You could simplify the tax code and eliminate loopholes, reducing both administrative and compliance costs and economic distortions, without touching marginal rates. Sure, this would increase revenues. But it seems pretty obvious to me, as it would to a third grader, that if the problem is the budget deficit, then you want to increase revenues.

Paul Ryan is a major league con artist and all Republican tax plans suck ass.