Tax Reform Beyond Left And Right

Whether you believe that government plays too big a role in society, or too small, we should be able to agree that it is better for taxes to be collected in a way that causes as little economic harm as possible. Many things can be said about the American tax code, but not that it is a pinnacle of efficiency.

Harvard economist, and adviser to Mitt Romney, Greg Mankiw lays out some ideas for tax reform that most people should be able to agree on. They follow four basic principles:

  1. Broaden the base and lower the rates
  2. Tax consumption rather than income
  3. Tax bads rather than goods
  4. Keep it simple, stupid

Why isn’t this done? Individually, a lot of the specific policies currently in place enjoy substantial political support, and although we would be better off with an overhaul it is too tempting for politicians to cherry pick individual deviations that could win them votes. Perhaps this problem is made bigger by the type of electoral system that the U.S. employs for Congress.

Sweden reformed its tax system in the early 90:s, largely following those principles. Of course, since then, complexity has grown again, as individual policies change the code without paying sufficient attention to their impact on taxation as a whole.

2012 is probably not the best year to attempt something like this in the U.S., but hopefully efforts can be made after the presidential election.

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One thought on “Tax Reform Beyond Left And Right”

  1. De borde införa moms.En fördel med moms är att då betalar även de illegala invandrarna genom sin konsumtion skatt.De illegala invandrarna i USA är ju många miljoner.

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