Revenue Neutrality As Back-Door Redistribution
Staff Attorney Chris Atkins has posted a new commentary warning against using revenue neutrality as an excuse to shift tax burdens from favored political constituencies onto politically unpopular groups like smokers and big companies:
When President Bush created his Advisory Panel on Federal Tax Reform, he required that any proposal crafted by these experts must be “revenue neutral” – meaning, the new tax system must raise the same amount of tax revenue as the old system.
Considering the size of the federal deficit and his plan to reform Social Security, this is an understandable goal. But, this restriction opens the door to many bad tax policies, where politically powerful groups will get lower taxes that have to be made up by raising other people’s taxes — robbing Peter to pay Paul.