Comments 4

  1. None TL!

    Broadening the tax base and simplifying the tax code: who could be against either idea? Very few in principle but almost everyone when it comes to implementation. Ethanol subsidies? The home mortgage interest deduction? Raise your hand if you’re in favor of eliminating either. (And don’t bother running for elective office.)

    Even if a revenue-neutral overhaul of the tax code gets through Congress–a big if–it will do nothing to solve the problem of embedded government spending on (mostly middle class) entitlements and defense. Not to mention looming demographic issues (i.e., we’re not growing the tax base). (Dare you to write about those, Donald.)

    All of this suggests to me that the current reasonably comfortable steady state of affairs is going to come to a hard end. Which should remind us that our ultimate hope is in the heaven-initiated consummation of all things.

    1. Thanks, Scott.

      I think that’s where reform might need to be more all-encompassing. If we were to more thoroughly rework and reinstate the tax code, it might be possible to remove some of these special carve outs because we choose not to put them in to something new, rather than removing them from something old. That said, I think you’re right, it’s political suicide to advocate the end to some of these benefits, and that’s not good economic news.

      Time will tell if the demographic issues come to bear as hard for the U.S. as they are in other jurisdictions. Despite some contrary leanings, we have been more open to immigration than some other developed countries (esp. countries like Japan, who are facing some of the worst challenges). While our own population isn’t replacing itself all the time, immigrants are, and other cultures are. In some ways, the future is the Mormons, the Catholics, and other groups who have historically favored larger families. As of right now, millenials outnumber baby boomers, so, while you’re right that demographic shift to an older average age will cause issues for entitlement spending, that crisis is relatively far off yet.

  2. Thank you Donald for your work and research on the Fed tax structure. Your articles have been helpful. What a tangled web has been weaved over the years. We need people like you to help untangle the web. What ever happened to the old simple formula–income must equal output?? Or why can’t we be satisfied with a balanced budget? Are we beyond the point of no return and someday our taxes will have to go up??

    1. I’m glad you’ve found the series helpful, Marion.

      This is an area where the federal government could perhaps learn from states, who have to run a balanced budget in many cases. Overall, more awareness of what our receipts are and a willingness to peg expenditures to average collections would be helpful. In years of higher receipts, we could (now) pay down debt or (later) build a rainy day fund, then in down years, we wouldn’t have to slash spending because of built surpluses. Monetary policy does get more complicated in ways that allows fudging the system more than this, but I think we’re pushing the outer limits of that fudge factor.

      Sadly, even Trump, running on a platform of austerity-type cuts to much of the government, chose to propose a colossal increase to defense spending that undoes any budgetary restraint that was gained elsewhere. So no one, political insider or outsider, seems willing to address our spending concerns while they can yet be fixed, and I do fear we’ll need to be on a fiscal cliff before there is political will to be serious about this issue.

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