By Chris Edwards
President Obama has a new budget and a new Treasury study that promise “tax reform.” He says that he wants to abolish “dozens of tax loopholes,” but he also proposes a boatload of new special-interest tax breaks. The president says that he wants everyone to “play by the same rules.” His tax plan does the opposite.
Serious economists know that tax reform means lower marginal tax rates, simplification and a neutral tax base that doesn’t distort investment. Those were the goals of the bipartisan Tax Reform Act of 1986 and of many reform proposals since. However, that basic understanding of tax reform has eluded the Obama administration.
The administration is calling for “corporate tax reform that will close loopholes,” but it is also proposing new tax breaks (“loopholes”) for green buildings, green manufacturing and green car production. And it is proposing tax breaks for “manufacturing communities,” “advanced manufacturing,” “growth zones,” businesses that insource production and businesses that increase their wages. The administration also wants to expand the low-income housing tax credit, which is a giveaway to real estate developers.
President Obama has a new budget and a new Treasury study that promise “tax reform.” He says that he wants to abolish “dozens of tax loopholes,” but he also proposes a boatload of new special-interest tax breaks. The president says that he wants everyone to “play by the same rules.” His tax plan does the opposite.
Serious economists know that tax reform means lower marginal tax rates, simplification and a neutral tax base that doesn’t distort investment. Those were the goals of the bipartisan Tax Reform Act of 1986 and of many reform proposals since. However, that basic understanding of tax reform has eluded the Obama administration.
The administration is calling for “corporate tax reform that will close loopholes,” but it is also proposing new tax breaks (“loopholes”) for green buildings, green manufacturing and green car production. And it is proposing tax breaks for “manufacturing communities,” “advanced manufacturing,” “growth zones,” businesses that insource production and businesses that increase their wages. The administration also wants to expand the low-income housing tax credit, which is a giveaway to real estate developers.
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