In its assessment of Charlie Rangel’s taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. reform bill put forth two weeks ago in an article entitled “No more than a B-,” The Economist magazine published what may be the best paragraph on tax reform I have ever read on an editorial page:
With a bit more ambition, Mr Rangel could have suggested reforms that make the tax code more progressive and, at the same time, simpler. America’s personal income tax code is riddled with deductions—from the subtraction of mortgage interest to countless incentives for savings. Such deductions, which are worth hundreds of billions of dollars a year, narrow the tax baseThe tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates. and distort behaviour, and their benefits flow disproportionately to the most affluent taxpayers. Capping these deductions, or getting rid of some altogether, would be a far better way to pay for AMT repeal.
To read the full article, click here.
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