Let's Talk about Tax Reform

A few Republicans out there, struggling to put the IRS scandalette in a larger context, are now saying it shows we need tax reform. It doesn't really, unless their argument is that we've been letting shamelessly political 501(c)(4) organizations get away with a scam and we ought to clarify the law on what such organizations can do. But that's not what they're saying. What they're saying is that the IRS matter shows we need to change the tax code to reflect the same policies they've advocated forever.

It wasn't as though this particular scandal arose because filing your personal income taxes is too complicated or because the corporate tax system is riddled with loopholes. It was something very specific, the law regarding how certain kinds of nonprofit organizations are allowed to operate. Frankly, there's no part of the tax code conservatives care less about. What they're interested in is changing personal and corporate taxes.

Ted Cruz, for instance, says, "We ought to abolish the IRS and instead move to a simple flat tax, where the average American can fill out our taxes on a postcard. Put down how much you earn. Put down a deduction for charitable contributions and home mortgage. And put down how much you owe." For someone everyone says is super smart, Cruz has a remarkable knack for floating utterly idiotic ideas. Because once you abolish the IRS, who is going to be processing these postcards? And if you can deduct your charitable contributions, who decides what's a legitimate charity for which you can take a deduction? It would have to be some kind of service that dealt with revenue, perhaps internally.

I'm all for having a discussion about tax reform. In fact, I share some of the goals Republicans say they have. A fairer system? You bet! A simpler system? Absolutely! For a long time I've been saying that Obama ought to pursue tax reform as one of the big goals of his second term. My favored reform, one that would go a long way toward making the system fairer and simpler, is to simply tax all income according to the same rate schedule, no matter where it comes from. Right now we have one set of rates for wages, one set for inheritances, one set for capital gains, and so on. There's nothing fair or simple about it.

Granted, Republicans don't like that idea much, mainly because most of those special breaks have the effect of lowering taxes for the wealthy (as Jon Stewart said the other night in response to Republicans decrying the complexity of the tax code, it wasn't poor people who wrote all those loopholes and special breaks in). But let's have that debate. They can talk about what particular reforms they'd like to see, Democrats can talk about their reforms, and we can start negotiating.

Until we get there, though, there's one thing to make clear: Every time a conservative says the tax code should be "flatter," what he or she is saying is that either 1) rich people should pay less; 2) poor people should pay more; or 3) both. They often toss out the word "flatter" as though flatness were some self-evidently virtuous concept that doesn't require explanation. In fact, it's often twinned with fairness, as in "the tax code should be flatter and fairer." But every time a Republican says he wants a flatter tax code, the proper follow-up is, "Do you think the wealthy should pay less, the poor should pay more, or both?" I'm not sure what kind of responses you'd get (mostly evasion, probably), but they should be forced to clarify just what it is they're proposing.

Would a tax-reform debate devolve into partisan bickering? Maybe. Probably, even. But it's something that Republicans say they want, and it's something that Obama has said in the past he wants. So why not go ahead and get it started?

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