These Reforms Would Simplify Our Messy Tax Code—and Level the Playing Field
Republicans claim they are slashing government, but they’re about to explode the budget deficit to extend President Donald Trump’s tax cuts—which would balloon interest payments on the national debt, already one of the largest expenses in the federal budget. That’s no way to slash the size of government.
They could offset the lost revenue from tax cuts by reducing spending and entitlements, but that would require hard political choices. Instead, Senate Republicans are attempting to resort to budget gimmicks. Pretending the 2017 tax cuts were always going to be extended makes it look like the current proposal has no cost.
That’s pure political cowardice. There is an alternative to this mess.
The U.S. tax code is broken. That’s mainly because it collects revenue in an arbitrary, distortionary, and unfair manner. At the heart of the problem are “tax expenditures”: credits, deductions, and loopholes that benefit the government’s favorite groups and behaviors.
These provisions make the tax code more complicated, less neutral, and less growth oriented than it ought to be. Worse, they shift the burden onto the unfavored groups, requiring higher rates to make up for revenue lost to carveouts.
This isn’t just a matter of accounting or administrative complexity; it’s a matter of morals. As the late economist David Bradford observed, our tax code reflects no coherent philosophy.
It’s a patchwork of exceptions and preferences designed more by lobbyists than by public servants. Policymakers claim they are encouraging savings, promoting fairness, or aiding the poor. In reality, many tax expendi
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