New Year's tax policy resolutions: work together, stick to goals(Read article summary)
This year, tax policy makers need to work together to achieve revenue goals, and never lose sight of the long-term.
Congressional Budget Office
In my column in this weekâ€™s Tax Notesâ€“in which Grover Norquist has been named 2011 â€śtax person of the year,â€ť by the way (more on that later)â€“I list a few new yearâ€™s resolutions for tax policy (emphasis and brief descriptions added):
[Here are] some New Yearâ€™s resolutions for those who make, study, and care about U.S. tax policy: (1) donâ€™t view tax policy in a vacuum [recognize the interaction of tax policy with the rest of the federal budget and government's role in general]; (2) plan ahead for expiring provisions [look ahead to what's coming due in the next year, and start the policy debates and analysis now rather than in the 11th hour]; (3) accurately analyze short-term versus longer-term economic effects [how are the considered policies helpful or harmful to the economic goals of highest priority?]; (4) set revenue targets and stick to them [use the budget process and budget committees to bring tax policy into the deficit reduction effort]; (5) treat tax expenditures more like expenditures [recognize they're more like spending-side subsidies than simple tax cuts, and scrutinize them to evaluate whether their benefits are worth their costs]; (6) donâ€™t be hypocritical about fiscal responsibility [don't fuss over the small-change items while giving a huge pass to the big-ticket ones]; (7) donâ€™t be so afraid to agree with the other side [there's huge bipartisan common ground on goals for tax and fiscal reform if policymakers would only stop picking fights]; and (8) get specific about good tax policy [study, analyze, and better promote the specific tax policies that experts recognize as economically smart so that policymakers are forced to notice and respond].
Note that this list is more broadly applicable to fiscal policyâ€“tax and spendingâ€“more generally, but I was writing for Tax Notes, of course.
The biggest item on this yearâ€™s expiring tax provisions list is of course (and yet again) the Bush tax cutsâ€“or as I sometimes refer to them, the Bush/Obama tax cuts.Â Who knows, if policymakers keep doing the same old thing with them, by next year they could become the â€śBush/Obama/Romney [or Santorum or Gingrich or Paul]â€ť tax cuts!
My Tax Notes column reprinted the CBO table above, just to highlight the point that these expiring tax cutsâ€“just the ones set to expire by the end of this yearâ€“are worth $4 to $5 trillion over the next ten years, without interest costs.Â (Remember the â€śgo bigâ€ť goal?)
Happy New Year to my EconomistMom readers!Â More from me later this week.