November 18, 2004

The Taxman Lieth

Two questions I would ask the White House or the White House economic team about "tax reform", if I were in the White House press corps:

1) The two tax increases you've reportedly proposed—repealing deductions for state/local taxes and repealing employer health-insurance deductions—would only raise enough revenue to allow you to make the current tax cuts permanent. That's it. So where will the revenue for all the extra tax reforms come from? Dynamic scoring? (See here for an explanation.)

2) How on earth can you expect that your tax reforms will boost savings and investment if it allows for transition relief between a) taxing income/wealth to b) taxing wages. Isn't the economic consensus that, well, this is nonsense? (See here.)

I know that as Democrats, we're supposed to be proposing alternative visions. We're also supposed to be complaining that this new tax reform vision is unfair—which it is. But I want to point out that a) these cannot possibly be "revenue-neutral" changes and b) the economic effects may well be negligible. Once we get that settled, we can move on to alternate visions.
-- Brad Plumer 5:52 PM || ||