A Fine Mess: A Global Quest for a Simpler, Fairer and More Efficient Tax System by T. R. Reid

The journalist T. R. Reid argues that America’s national tax system is a disaster, but we could fix it if we started over and adopted the best ideas about taxation from other countries. According to Reid, better systems of taxation are based on the BBLR model, i.e. they tax as much as possible (a “Broad Base”) but at rates that are as low as possible (“Low Rates”). So, instead of allowing lots of deductions and exemptions and credits, as we do now, we should simply tax all income. But since more income would be subject to taxation, the government could lower tax rates for everyone. Because their rates would be lower, fewer people and businesses would hire lawyers and accountants in order to avoid taxes. Business decisions and personal decisions would no longer be made on the basis of what taxes would be owed. In addition, filing a tax return would be much simpler than it is today.

Reid cites New Zealand as the country with the best tax system in the world. They once had a complicated tax system like ours, but were able to revamp the whole thing, following the BBLR model. He also argues for the adoption of a VAT (Value Added Tax), a kind of sales tax that every advanced country but the United States currently applies (one benefit of a VAT is that it’s hard to evade).

Some of the ideas Reid proposes would be acceptable, in theory, to both liberals and conservatives. But he admits that overcoming opposition from special interests and taxpayers who benefit from the system’s complexity would be a big challenge. For example, he recommends eliminating the deductions for charitable donations, local taxes and mortgage interest. I assume he would eliminate medical deductions as well. No doubt some taxpayers would end up paying more, while some would pay less. But we would have a system of taxation that was simpler, fairer and more efficient.

Given the benefits, it seems like the United States should do something like this. Given the craziness of the Republican Party, it seems unlikely that we ever will.

This Editorial Would Have Made a Good Blog Post

Editorials in the New York Times tend to be rather restrained, befitting the dignified nature of the place (the Times still refers to Vladimir Putin as Mr. Putin and Nancy Pelosi as Ms. Pelosi, for example). But in an editorial called “Center Ring at the Republican Circus”, they’ve finally had enough, adopting a level of scorn and sarcasm befitting angry bloggers everywhere. Good for them!

Quote:

The hottest competition in Washington this week is among House Republicans vying for a seat on the Benghazi kangaroo court, also known as the Select House Committee to Inflate a Tragedy Into a Scandal. Half the House has asked to “serve” on the committee, which is understandable since it’s the perfect opportunity to avoid any real work while waving frantically to right-wing voters stomping their feet in the grandstand.

They won’t pass a serious jobs bill, or raise the minimum wage, or reform immigration, but House Republicans think they can earn their pay for the rest of the year by exposing nonexistent malfeasance on the part of the Obama administration. On Thursday, they voted to create a committee to spend such sums as may be necessary to conduct an investigation of the 2012 attack on the consulate in Benghazi, Libya. The day before, they voted to hold in contempt Lois Lerner, the former Internal Revenue Service official whom they would love to blame for the administration’s crackdown on conservative groups, if only they could prove there was a crackdown, which they can’t, because there wasn’t.

Both actions stem from the same impulse: a need to rouse the most fervent anti-Obama wing of the party and keep it angry enough to deliver its donations and votes to Republicans in the November elections. For a while it seemed as if the Affordable Care Act would perform that role, but Republicans ran into a problem when the country began to realize that it was not destroying American civilization but in fact helping millions of people.

The entire editorial is here.