Tax Reform: First, Do No Harm
With two very different tax reconciliation bills pending in the House and Senate, Tax Notes asked two prominent members of the tax policy community to face off on tax priorities. In this article, John Irons, Director of Tax and Budget Policy at the Center for American Progress, urges Congress to begin the debate over fundamental tax reform while rejecting Republican proposals to further reduce taxes on capital gains.
They say addicts have to hit rock bottom before a healthy recovery can begin. On tax policy, we may not have hit bottom yet, but we’re getting close. The Congressional Budget Office last week projected an increase in the deficit for 2006 to $360 billion once money for some Iraq-related military spending and some hurricane relief is included. Without any legislative changes, $1.1 trillion will be added to the national debt over the next five years. Extending expiring tax provisions and reforming the alternative minimum tax would add a whopping $3.4 trillion to the debt over the next 10 years.
Given the nation’s current fiscal needs, and the need to prepare for future expenses like the retirement of the baby-boom generation, the current path is unsustainable. Furthermore, the tax cuts since 2001 may have been a boon to the wealthy, but have done little to help middle-income America and the economy.
This year Congress should stop digging and enact as few tax changes as possible, specifically by avoiding making permanent changes to the code. Instead, Congress needs to admit that it has a problem — the tax code is badly in need of an overhaul — and begin the long road to recovery.
Read complete article (PDF from Tax Notes)
John Irons is the Director of Tax and Budget Policy at the Center for American Progress.