Newspaper article The Christian Science Monitor

Kill the Tax Code? Great Sport, Risky Business

Newspaper article The Christian Science Monitor

Kill the Tax Code? Great Sport, Risky Business

Article excerpt

Everyone has something they just can't stand, that they wish would just disappear. For many people, that "something" is the income tax. As the April 15 filing deadline approaches, many households trying to figure out their tax forms may be ready to try almost anything instead of the current system.

Perhaps with these people in mind, Rep. Steve Largent (R) of Oklahoma and Sen. Tim Hutchinson (R) of Arkansas have introduced legislation to eliminate federal personal, corporate, estate, and excise taxes by Dec. 31, 2001. More than a third of House and Senate members are co-sponsors. House Speaker Newt Gingrich (R) of Georgia and Senate majority leader Trent Lott (R) of Mississippi have also signed pledges to "kill the {tax} code."

While everyone agrees that taxes need repair, these proposals are vacuous and risky gimmicks. The bills are lacking in one crucial regard: What would replace the current system? The proposals stipulate that the new system be simple and fair, not tax saving and investment, end the bias against marriage and family, and be "thoughtfully and deliberately determined by the Congress, the president, and the American people." These guidelines are vacuous because fairness will always be in the "eyes of the beholder" and the income tax already subsidizes families. And all major reform proposals tax resources that are saved at least once - either when the money is earned or consumed. If the legislation actually passed, the government would be faced with the task of replacing, in a few short years, taxes that in 1997 raised $1.02 trillion, or 12.6 percent of GDP. This would create a tremendous amount of uncertainty. Could Congress and the administration reach agreement on a new system by the required date? Would the new system raise enough revenue? What features would the new system contain? The economic effects of such uncertainty could be crippling. Investors who lacked confidence in the ability of Congress and the administration to reach an agreement that raised sufficient revenues would bid up interest rates, fearing increased future budget deficits. Higher interest rates would hurt investment and, because the government pays net interest, raise the deficit as well. …

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