The Volker Board has released its report on tax reform. It is an options paper, with advantages and disadvantages enumerated, rather than a recommended program. I hope Congress and the Administration study it carefully, for there really are a lot of ways to simplify the taxes we pay and the rules surrounding them.
Most public debate about taxes is on big, binary choices: increase or decrease; flat or progressive; pro- or anti-family. The Volker report shows that we have a very complex tax code, with a lot of individually reasonable provisions that, lumped together, create confusion and inconsistency. It suggests ways to simplify, consolidate, rationalize, and otherwise improve our tax system.
As I wrote several months ago, a large unexplored area for deficit-reducing revenues is in those "tax expenditures" [aka "tax breaks" or "loopholes"] that lawmakers have added over the years to promote seemingly good things like home ownership and business research and employer-paid health plans. A case can be made for each, but lawmakers and citizens need to weigh their current value and the priorities of each compared with ongoing governmental activities. Together with many of the modest options in the Volker report, there are worthwhile ideas for simplifying the tax code and regaining currently lost revenues.
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