February 13, 2009
Policy Experts with Divergent Political Views Urge More Progress on Bipartisan Tax Reform
Four Tax Scholars Unite to Author Paper Discussing Opportunities to Create a More Transparent and Straightforward Tax Code
Washington, DC, February 13, 2009 - Declaring that U.S. tax policy is urgently in need of reform, four experts with diverse perspectives on fiscal and tax policy released a paper today that makes specific recommendations to bring simplicity, transparency, efficiency and equity to the tax code.
In Tax Foundation Working Paper No. 5, "Moving Forward with Bipartisan Tax Policy," Robert Carroll, Vice President for Economic Policy at the Tax Foundation, joined John E. "Buck" Chapoton and Diane Lim Rogers of the Concord Coalition, and Maya MacGuineas of the Committee for a Responsible Federal Budget to present a reasonable, middle ground approach to tax policy to illustrate the types of sensible policy choices that could be made.
"Federal policymakers face a choice: they can either continue to operate in a 'reactive' mode, proposing tax legislation haphazardly, resorting to temporary fixes, and acting hastily when tax legislation is due to expire," say the authors, who have served with both Democratic and Republican Administration's and members of Congress, "or they can take a 'proactive' stance, instituting farsighted reforms that will lead to an efficient and fair tax system for the long term."
In the midst of the current economic downturn and debate over how to "stimulate" the economy in the short term, the authors argue that any plan to grow the economy needs to meet clear long-term objectives and not be a backdoor mechanism for implementing permanent deficit-financed policies. The authors also urge adherence to some basic principles: broadening the tax base while lowering rates, reducing economic distortions in the tax code, encouraging national saving and making the tax system more transparent.
With these principles in mind, the authors recommended the following broad approaches for reform:
• Create a more transparent and straightforward tax code
• Promote saving by shifting toward a progressive consumption tax
• Rethink tax expenditures
• Update U.S. business income taxes
• Implement an environmentally motivated tax policy
"We believe that a productive discussion of tax reform must start where tax and budget policy considerations intersect," the authors conclude. "The approach we have laid out can serve as an excellent starting point for developing a comprehensive, bipartisan proposal that would vastly improve our tax system."
Working Paper No. 5 can be found at http://www.taxfoundation.org/research/show/24335.html. Biographies of the authors can be found below.
The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.
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Robert Carroll is an executive-in-residence with American University's School of Public Affairs, and co-founder and co-director of the University's Center for Public Finance Research. He is also the Tax Foundation's Vice President for Economic Policy. Mr. Carroll is a nationally recognized tax policy expert who recently served as the U.S. Treasury Department's Deputy Assistant Secretary for Tax Analysis. In that role he oversaw and directed the Treasury Department's efforts on reform of the tax system including providing analytical and other support to the President's Advisory Panel on Federal Tax Reform.
John E. "Buck" Chapoton has been a partner of Brown Advisory, an investment firm based in Baltimore, MD, since 2001. From 1981 to 1984, during the first term of President Reagan, Mr. Chapoton served as Assistant Secretary for Tax Policy of the U.S. Treasury Department. In that position, he served as the Administration's principal spokesman before the Congressional tax-writing committees.
Maya MacGuineas is President of the Committee for a Responsible Federal Budget and Director of the Fiscal Policy Program at the New America Foundation. There, Ms. MacGuineas oversees the Foundation's efforts to bring accountability to the budget process, address the challenges presented by the nation's underfunded entitlement programs, and propose comprehensive tax reforms that would improve both the efficiency and equity of the tax code.
Diane Lim Rogers is the Chief Economist at the Concord Coalitions and the author of the blog EconomistMom.com. Previously, she has been Chief Economist for the House Budget Committee, Research Director of the Budgeting for National Priorities Project at the Brookings Institution, Chief Economist for the House Ways and Means Committee Democrats, and a Principal Economist covering tax and budget policies for the Join Economic Committee Democrats. She was also a Senior Economist on the staff of the Council of Economic Advisers during the last year of the Clinton Administration and the first 100 days of the Bush Administration.
