Tax reform should take center stage at debates

Kelly Sloan
Kelly Sloan

A great deal has been made of the fact that in previous Republican presidential debates, the most conspicuous casualty has been discussion of serious questions of policy and that, by contrast, the Democratic debate was brimming with policy.

Never mind that a crowded stage of 14 candidates all vying for a memorable soundbite is more conducive to a circus than a true debate or that the policy emanating from the Democratic candidates ranged from horrifying and irrational to childish and unsound. (The sole exception being Jim Webb, who actually had some reasonably useful things to say.) The point is valid, nonetheless, that serious policy discussions among GOP candidates, at least on the public debate stage, have eluded us.

The Republican candidates are meeting again Oct. 28, this time right here in Colorado, albeit Boulder. The field hasn’t been winnowed very much, save one of the most qualified and viable candidates in Wisconsin Gov. Scott Walker. So optimism an examination of hard-core policy stances could take place might be striding with ill-deserved confidence towards this conversation. Still, the opportunity exists to raise some key points and to carve out differences between the two camps.

One issue thirsting for such a discussion is tax policy. Consider a few facts:

At 35 percent, the United States corporate tax rate is among the highest in the industrialized world.

The U.S. Tax Code is, as of 2013, a staggering 73,954 pages long, up from around 60,000 pages a decade ago and up from less than 30,000 pages (still an outrageous number) in 1984.

It’s been 29 years since the last major overhaul to the tax code.

In light of the anemic growth the U.S. economy has experienced in recent years, all of this ought to suggest meaningful tax reform is in order.

It’s a question that really should be prime territory for Republicans. Disciples of supply side economics, which by now really ought to be anybody who looks seriously at economic matters, recognize tax rate reductions generally result in tax revenue increases as growth ensues. But tackling the tax question requires more than reflexive prescriptions.

A reduction in the corporate tax rate is an easy place to start. Having the highest corporate rate among industrialized nations has served as an anchor on domestic economic growth, growth which has been exported to nations with more reasonable rates. One entirely foreseeable result of this has been instances such as we witness with such major corporations as Burger King moving their corporate headquarters to those other countries. The reaction of Congress? Attempt to make such moves illegal rather than address the circumstances that made tactics of this nature necessary business practices.

The next question, and one which could serve to define the economic inclinations of the various candidates, is that of deductions. Perhaps the most egregious characteristic of the current tax code is its propensity to attempt to influence social behavior. Co-opting other people’s money to support institutions in political favor with the existing governing base is a stance against which Republican presidential candidates should have no qualm. The tax code should not be used to write social policy — but the deeply progressive system under which our tax code operates encourages just that. As a society, we’ve been led to believe there’s a magical source of money in Washington D.C., and this has led to the socialization of the charitable impulse. We need to be careful in distinguishing deductions — the act of taking less of someone’s money — from subsidization. But it’s fair to ask, for instance, if taxpayers are granted a deduction for contributions to, say, the local symphony, how much less money is then available for use and is that legitimate use of tax policy?

As much as we need to liberate ourselves from the fallacy that lowering tax rates is the equivalent of a subsidy to the tax-paying entity, we need at the same time to emancipate ourselves from the presumption tax policy is the best, or even a desirable, mechanism for influencing social policy.

Under this illumination, a tax policy that lowers the corporate rate and reduces deductions in exchange for a lower, uniform rate that precludes the temptation to use tax policy as a social hammer is the basis on which the GOP candidates for the nation’s highest office should expound upon in Boulder.