The release of President Trump’s outline for tax reform put the issue at the top of the agenda. Now policymakers need to figure out how to do it responsibly. Fortunately, there are principles to guide the way.
We definitely need reform; it’s been over thirty years since we last overhauled the inefficient, complex, unfair, and outdated tax system. But we cannot afford changes that will increase the already unsustainable national debt.
Our partners at the Committee for a Responsible Federal Budget issued a statement on the White House outline. It included:
We share the President’s desire to enact pro-growth tax reform and encourage him to work with Congress to reduce rates and deficits. We are encouraged the White House is talking about eliminating some tax breaks; now the tough choices have to be made on how to broaden the base and pay for tax reform.
Unfortunately, it seems the Administration is using economic growth like magic beans – the cheap solution to all our problems. But there is no golden goose at the top of the tax cut beanstalk, just mountains of debt.
Here is some real math: Debt is twice its historical average; higher as a share of the economy than any time outside of the World War II era; and growing faster than the economy with no end in sight.
Instead of banking on fantasy growth rates to offset debt-financed tax cuts, we should be pursuing sustainable economic growth to lift incomes and reduce budget deficits.
There is a way to get tax reform that grows the economy and helps to fix the debt. The Committee lists 5 Principles for Responsible Tax Reform.
- Promote Economic Growth and Dedicate the Gains to Deficit Reduction
- Be Fully Paid for So It Does Not Add to the Debt
- Set Permanent Tax Policy
- Avoid Gimmicks
- Rely on Reasonable Economic Assumptions
Our Tax Reform Resource Page has much more on the tax system, the need for comprehensive reform, and various reform ideas.
You can tell Congress to do tax reform the right way. Write Congress today to enact smart tax reform.
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