Tax Law

In Defense of Tax Reform Fantasies

My colleague Marty Sullivan is unconvinced by recent arguments for pairing deficit reduction with tax reform. "Tax reform is one of the most arduous tasks Congress could ever undertake," he points out. "So is massive deficit reduction. What is it that makes people think that doing both simultaneously will make everything easier?"

It's a good question, but one with a reasonable answer. History suggests that such a pairing may be our only hope for raising taxes to meet the nation's fiscal crisis.

. . . .

It's quite possible that some sort of non-war crisis could also prod reluctant pols to do their job (including both raising taxes and cutting spending). But that sort of crisis will be deeply unpleasant. Do we really want to wait this out, counting on a bond market meltdown to shake loose our fiscal logjam? Aren't there better ways of moving the process forward?

As I argued recently in an article for Tax Notes magazine, I think tax reform might be the answer. The Tax Reform Act of 1986 demonstrated that base broadening coupled with rate reductions can find a political constituency, both in Washington and around the country. . . .

Look, I'm not saying it's a gimme. I still think it will take a catastrophe to force real action on the nation's fiscal future. But I'm unwilling to toss in the towel (at least right now), so you count a fan of fiscal fantasy.

View TaxAnalysts' Joseph J. Thorndike's opinion in its entirety on TAX.com.

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