Our Wish List for Tax Policy in 2008
December 27, 2007
Now that all the presents have been unwrapped and the holiday festivities are over, people’s thoughts will soon turn to New Year’s resolutions. Even those who don’t make resolutions probably have some ideas about things they would like to do differently in the New Year.
We at the Tax Foundation have some thoughts about an area in which federal and state policymakers could use some improvement in 2008: tax policy. With this in mind, we have compiled a wish list for tax policy in the new year. This list can be viewed here and below.
Since 2008 is an election year in which a predicted economic slowdown could put pressure on some government budgets, reporters and politicians are likely to give the public a double dose of tax policy.
Special interests will, as always, push tax policies that favor themselves at the expense of other taxpayers. Social engineers will continue pushing tax policies that redistribute money based upon health, age, income, and other demographics. And finally, gimmicks like tax holidays and tiny, overhyped tax cuts will be featured in legislatures and political campaigns. Champions of sound tax policy like yours truly at the Tax Foundation will view all these policies with a skeptical eye.
Our Wish List for Tax Policy in 2008
1. Politicians will stop playing word games, and call taxes “taxes” and not “fees,” “surcharges,” or “profits.” Any assessment that raises money in excess of what is needed to defray costs is a tax.
2. Politicians will stop using the tax code to give even more preferential treatment to sectors like housing and healthcare that are already tax-pampered. This includes using the tax code as a bailout for homeowners.
3. Elected officials in state governments seeking to give property tax relief to homeowners will not do so merely by shifting to some other source of tax revenue like sales or income (which usually ends up as a tax increase) or by shifting it all to commercial property owners.
4. Members of Congress will finally realize that two oceans can’t protect us from the tax competition sweeping the rest of the world. China is now the latest country to cut its corporate tax rate.
5. Politicians will stop raising taxes on arbitrarily targeted items like cigarettes, alcohol, bottled water, soda, tasty food, adult entertainment, gambling, etc. just because they want to raise revenue for some government program that is supposed to provide broad public benefits.
6. State officials will stop obstructing our national market by attempting to export taxes to “out-of-staters.” States should attract investment with pro-growth policies, not by protectionist penalties on the productive.
7. At least one of the states that have recently considered lottery privatization will go through with a sale (not a lease!). That will reverse the domino effect of state governments going into the business of promoting gambling.
8. States will eliminate gimmicks like sales tax holidays and instead lower sales tax rates for the entire year.
10. Congress will avoid another AMT ping-pong match in late 2008, instead acting in the public interest by passing fundamental tax reform that merges the good features of the AMT (a broader tax base and lower tax rates) into the regular tax code.
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