I just read Stephen Moore’s new book “Who’s the Fairest of Them All? The Truth About Opportunity, Taxes, and Wealth in America“. Thomas Sowell gave it a nod last week when he wryly observed,
If everyone in America had read Stephen Moore’s new book, “Who’s The Fairest of Them All?”, Barack Obama would have lost the election in a landslide. The point here is not to say, “Where was Stephen Moore when we needed him?” A more apt question might be, “Where was the whole economics profession when we needed them?” Where were the media? For that matter, where were the Republicans?
Indeed. This book does a great job in a little over 100 pages of expelling the myth that “the rich need to pay their fair share” by showing with quantitative data that cutting taxes spurs economic growth, and that tax cuts increase tax revenue collection. These are some of the very topics I’ve written about before on this site.
We need to let the “Bush tax cuts” continue. Except that they really aren’t the Bush tax cuts anymore — they’ve been the law for 10 years. Let’s stop pretending they are “very temporary” and either extend them again long term or else make them permanent.
We also need to overhaul the tax code. With the IRC reforms of 1986, Reagan reduced the tax rates to 28% in exchange for getting rid of the tax shelters. As a result, the amount of federal income collected was more at 28% and a clean tax code than at 91% and tax shelters, because at 28%, it really wasn’t worth the time, cost, and effort to hide money.
We need comprehensive tax reform, but not the type that Obama is pushing. His policies of more “tax credits” (which is government spending run through the tax code) and marginal rate increases hampers our recovery. If the federal tax rates are going to rise again – and they will, unfortunately, if Obama has his way – in addition to state and local tax hikes, the tax burden in this country will be staggering. People will do one of two things: 1) start finding ways not to pay it like they did when the rates were outrageous or 2) stop working and investing so much because it’s just going to get taken away from them. When that happens, the economy worsens — and it is already suffering enough. We need to simplify the tax code.