Fix The Debt

The subject of taxes has come to the forefront of the budget debate as both parties argue over what role they should play in addressing the national debt. And while this feud may not be getting as much attention as Mariah Carey v. Nicki Minaj, it is becoming just as heated and the implications for Americans are much more acute.

The only interchange regarding fiscal policy at Tuesday night’s presidential debate was in regard to the candidates’ tax plans. The back-and-forth at Hofstra University was by no means the last word on the matter.

On Thursday the White House signaled it would play hardball with Congress regarding taxes and the fiscal cliff. The issue of revenue has been one of the main impediments to a grand bargain on the debt.

Adding to the intensity of the debate was a recent analysis from the Joint Committee on Taxation that some argued showed that tax reform that eliminated or reduced tax expenditures could not both lower tax rates and the deficit sufficiently. However, an analysis from the Committee for a Responsible Federal Budget makes the case that such reform is indeed possible.

Corporate taxes are also getting more attention. A recent paper from CRFB examines how corporate tax reform can contribute to economic growth and a comprehensive debt reduction plan. Better yet, CRFB created a calculator that lets the user create their own corporate tax reform. It’s as much fun as one can have with the tax code.

That both parties are staking out ground is a good sign that they are taking the fiscal cliff and tax reform seriously. But they can’t cut off avenues for compromise.

Hopefully those axes that the politicians are brandishing will ultimately be swung at the debt and not at each other.