What should Congress do? #5 Tax Reform

Given President Obama’s abdication in presenting select priorities to the Congress, Selfish Citizenship took the initiative to spell out the top seven legislative priorities for 2013 at the beginning of the year.

I recall Rep. Frank Wolf tell us at a town hall meeting during Q&A that tax reform is an issue that requires presidential leadership.  While the zero in the White House lacks the gravitas, there are two principles that the Congress can follow to start reform of our current tax system.

First, taxes should not be punitive.  Under Obamacare, the Supreme Court approved of using the tax code to punish citizens; Congress should reject that power.  When Laffer’s curve is discussed related to the diminish revenue from higher tax rates, the cause is missed…those higher rates were punitive, punishing the successful for the crime of being successful.  Related to the power of this principle, see how the lowering of punitive capital gains tax rates led to eliminating the budget deficit in the 1990s.

Second, tax provisions should be exclusively for revenue and not an end around to exceed limits on congressional powers.  Over time, Congress has elected to use tax breaks and deductions to control citizens’ behavior in ways that are not permitted otherwise.  Imagine a law that ordered you to have a new child; yet the government actually punishes you with higher taxes for not creating that child.

If you see a person or company doing something stupid or wasteful, the likely cause is a federal tax incentive.

The elimination of punitive taxes and taxation as regulation is known by the euphemism tax simplification.

In summary of the seven legislative priorities, Congress needs to take the lead in fixing the problems created by prior Congresses.  All of these man-made problems were the predictable consequence of choices made in the Congress.  Now is the time for Congress to choose differently and these seven New Year’s Resolutions for Congress are a solid start.

Links to all the priorities that Congress should set:

#1 Reduce Regulations
#2 Block Grant Funds to States
#3 Eliminate Small Programs
#4 Sell Federal Assets
#5 Tax Reform
#6 Oversight
#7 Defund ObamaCare

Extra Point:  From visual artist John Cox:

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2 Responses to What should Congress do? #5 Tax Reform

  1. Pingback: What should Congress do? #6 Oversight | Selfish Citizenship

  2. Pingback: What should Congress do? #7 Defund ObamaCare | Selfish Citizenship

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