I timed this topic in the expectation that the Republican Congress would have completed Obamacare repeal and be nearing completion of its first budget, with yet more large tax and spending cuts. Like everybody else I overestimated their competence. President Trump just announced that repeal is dead and it’s time to move on to…more tax cuts (aka tax reform.) Since by law the first major step in preparing the FY2018 federal budget must be completed by April 1 and the FY2018 budget is not even close to finished yet, now would be a good time for both the GOP and CivCon to focus on taxes and spending.
Radically altering who bears the burden of paying for the American government has been the GOP’s raison d’etre for 20+ years. Obamacare repeal itself would have been a big tax cut on the wealthy and a big cut in subsidies for low-income Americans. It also would have opened up room in the budget for the really huge tax cuts they were planning as the real centerpiece of GOP governance. (I will explain how on Monday, or just see the link below.) I guess creating such room is wasn’t worth walking the plank of taking away millions of people’s health insurance.
Anyway, even without all of this drama, a number of considerations would complicate our discussion of tax fairness. There is more than one way of defining what’s equitable, for instance. Beyond fairness, Public Finance 101 says that a good public finance system should have other features, like be as “efficient” as possible (minimally distorting to the private economy). It should be sustainable and stable, simple,; and politically acceptable. Oh, and no discussion of the costs of government makes any sense if it ignores the benefits of government. As I have mentioned 8 million times, informed citizens must have a rough idea of what and who our taxes are spent on.
For links, I’ll try something a little different this week. This post will stay at the top of the website all week. It has the usual meeting discussion questions and a few short, useful introductory articles.
But, below it I will do 2-3 short posts. Each one will have one or two simple charts that illustrate something important about how high the tax burden is in the United States and who bears it. The idea is we need to know what is before we meet to debate what should be.
DISCUSSION QUESTIONS –
- Tax level/burden: What is the level and distribution of the tax burden now? Federal v. state/local taxes. Which types of taxes (income, corporate, payroll, etc.) cost the most? Who pays which taxes?
- Spending: Biggest programs and who benefits? Biggest misconceptions?
- Loopholes like the mortgage interest deduction are equivalent to spending. How are these “reverse tax burdens” distributed?
- Fairness: Ways of defining it + how should it be defined?
- Short run: How and for whom does GOP plan to change tax burden?
- Long run: How should/will burden be shared?
- What changes to tax fairness would Americans accept?
SUGGESTED BACKGROUND READING –
- Principles: The 5 principles of a good tax system = Equity, adequacy, simplicity, exportability, and neutrality. Very short and recommended.
- Public opinion on taxes/spending is plain nuts:
- ACA repeal: Why GOP must repeal Obamacare’s taxes to make room for future tax cuts.
NEXT WEEK: Which moral standards should we use for judging historical figures?