One of the biggest policy questions at stake in the presidential
election how to fix America's dysfunctional tax system has become
largely obscured by bickering over the budgetary math of one
The scrutiny of Mitt Romney's plan for a 20 percent cut in income
tax rates is deserved. That's a big tax change, and he hasn't
explained how he would pay for it at a time of chronic federal
deficits which he also pledges to reduce.
But the legitimate questioning of Romney's math has to some
extent short-circuited campaign debate over a much bigger issue: The
US tax code is widely perceived as burdensome, as it imposes steep
compliance costs and unduly distorts the behavior of businesses and
households. Reforming it offers a promising way to improve the
health of both federal budgets and the economy.
The big question is how to approach that task. Mr. Romney's plan
may or may not be the right one, but his general idea lowering tax
rates while limiting things like deductions in order to "broaden the
base" of taxable income is viewed by many tax experts as one
promising path forward.
Amid the din of dueling sound bites from the campaigns, some
voices on the sidelines are warning that this bigger picture is
"The real story should not be about one campaign nit-picking the
budgetary impact of the other campaigns proposals," Alex Brill, a
research fellow at the conservative American Enterprise Institute,
opined in an online commentary this month. "Rather the real story
should be about the substantive policy visions of each of the
Mr. Brill was aiming his comment at President Obama and his
Democratic allies. Others have similar concerns about Republicans.
"Lets all take a deep breath here," Howard Gleckman, of the
nonpartisan Tax Policy Center, appealed on Thursday after the Romney
campaign accused the center of issuing a new analysis that was
"misleading and deceitful."
In fact, Mr. Gleckman argued in a blog post, the center's latest
research efforts "provide evidence that a deduction cap," an idea
Romney has floated, "is a pretty good ... idea."
For the record, the Tax Policy Center and the American Enterprise
Institute are themselves part of the fray over Romney's tax math.
The center is funded by two left-leaning think tanks, and while it
has a reputation as nonpartisan, its analyses have been used heavily
by critics of the Romney plan. Brill, meanwhile, made his comments
within an article that also sought to rebut those critics.
Three basic issues in tax reform
But both Brill and Gleckman are right that there's much more to
debate than the details, or lack of details, in Romney's plan.
Basically, the idea of tax reform revolves around three issues:
how to obtain needed revenue for the federal government, how to be
fair (what level of "progressivity" to have in the tax code), and
how to maximize economic growth.
Romney emphasizes the goal of restraining the amount of tax
revenue the government takes, and calls for big federal spending
cuts to avoid big deficits. He also says he wants the code
essentially to retain its current progressive structure (with the
top 5 percent of households continuing to pay a 60 percent share of
income taxes). And he argues that simplifying the code, with lower
rates for corporations as well as individuals, will boost economic
He has brought the math debate upon himself, by announcing very
ambitious goals (cutting rates by 20 percent would bring the top tax
rate down from 35 percent to 28 percent) while leaving other key
Obama wants government to get more revenue than would occur if
the Bush tax cuts all remained in place. On fairness, his stated
goal is to keep taxes essentially the same for the bottom 98 percent
of households, while asking the rich to pay more as their "fair