Let's Stop With the Revenue Neutrality

Let's Stop With the Revenue Neutrality

For decades, most people have believed that the success of tax reform is dependent on the reform being revenue neutral. That is, whatever happens, the tax system has to raise approximately as much revenue after as it did before. Proponents of reform want to seem pure in thought. They profess to care only about the principles of sound taxation. They use lofty terms like efficiency and equity. They are not hacks pursuing some political agenda on behalf of special interests. As the editor of Tax Notes, Jeremy Scott, once noted everyone uses tax reform as a euphemism for other proposals (conservatives to cut taxes, liberals to raise them). But even the most hardened partisans still couch their proposals in terms of revenue neutrality (at least in the short run).

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Perhaps conservatives and liberals should be more honest at the outset. Conservatives should say the tax system is screwed up and needs to be fixed. But in doing so, we are going to reduce overall tax burdens, yes raise less revenue, and have a smaller government. Liberals should be just as up front. They can honestly say the system is screwed up. We are going to fix it in line with traditional thinking on good tax policy. But we are also going to raise overall tax burdens, collect more revenue, and pay for more government services...

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View David Brunori's opinion in its entirety on the taxanalysts® Blog.

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