As he did in last year’s budget, President Obama has called for a cap on retirement accounts, even though the personal savings rate in America hovers in the low single digits. Obama has added a provision to encourage...
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- Tax Reform Should Simplify the Code and Grow the Economy
Tax Reform Should Simplify the Code and Grow the Economy
The House Ways and Means Committee is continuing their push to reform the tax code. They released a video this week to outline their argument for the need to tax reform.
In their mind, tax reform should have two main goals: (1) to make the tax code simpler and fairer, and (2) to strengthen the economy.
These are important focuses for tax reform. In short, tax reform should make life better for taxpayers. It should free the economy to grow and create jobs and increase wages.
Our current system is far too complex, burdensome, and uncompetitive. If we were starting from scratch, we wouldn’t have the tax code we have today. In order to fix the code, tax reform should follow the principles of sound tax policy:
Simplicity: Complex taxes add time and confusion to paying for government. Tax rates and bases should be easy to comply with and to understand.
Transparency: Taxes should be clear. Taxpayers should know exactly what they pay and why.
Neutrality: Taxes should raise revenue necessary government services, not pick winners and losers in the economy.
Stability: Tax laws should not be in constant flux. Taxpayers and businesses should be able to rely on taxes not changing when they make decisions about their money.
When redesigning the tax code, we should develop tax policy that adheres to these principles.
We should unleash businesses (large and small) to create jobs. We need to eliminate the biases in the code against savings and investment, so individuals have the incentive to add back to the economy, and businesses have the capital to buy new machines, structures, and equipment – all the things that give workers the ability to be more productive and earn higher wages. And we need a tax code that is simple and understandable, so taxpayers know exactly what they pay and why.
All of this leads to a tax code that unleashes economic growth and, most importantly, improves the standard of living of everyone, from the bottom to the top.
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