As we watch Ted Cruz try to use the IRS “scandal” to flog a Flat Tax, while Ways & Means Committee chairman Dave Camp tries to use it to draw interest to a much more complex version of “tax reform,” TAP’s Paul Waldman makes the important point:
A few Republicans out there, struggling to put the IRS scandalette in a larger context, are now saying it shows we need tax reform. It doesn’t really, unless their argument is that we’ve been letting shamelessly political 501(c)(4) organizations get away with a scam and we ought to clarify the law on what such organizations can do. But that’s not what they’re saying. What they’re saying is that the IRS matter shows we need to change the tax code to reflect the same policies they’ve advocated forever.
The natural impulse of progressives (those who don’t just head for the hills the moment the word “taxes” comes up) is to respond to conservative tax “scandal” flackery by saying: “Let’s talk about the matter at hand: Why do you think the East Calcium Deposit Tea Party Patriots should enjoy a 100% tax exemption for money raised and spent to run campaign ads for Rep. Elmer (I Hate Government) Fudd?” And that is, in fact, a very important question to ask, if only to challenge the old switcheroo gambit whereby congressional Republicans are pretending this “scandal” has anything to do with the routine IRS activities that affect people who aren’t raising and spending money for political activities.
But as Waldman suggests, progressives should also be bold to ask questions about the alleged devotion of conservatives to highly popular ideas like “tax simplification:”
My favored reform, one that would go a long way toward making the system fairer and simpler, is to simply tax all income according to the same rate schedule, no matter where it comes from. Right now we have one set of rates for wages, one set for inheritances, one set for capital gains, and so on. There’s nothing fair or simple about it.
Granted, Republicans don’t like that idea much, mainly because most of those special breaks have the effect of lowering taxes for the wealthy.
Indeed, most conservative “tax reform” schemes involve either a general preference for, or total exclusion from taxation of, the kinds of income rich folks tend to receive. And at least with those schemes that don’t depend on massive corresponding spending cuts to make ends meet, that often means an increase in effective tax rates on people who don’t have capital gains or inheritances. We’ve already seen that dynamic in state-level “tax reform” efforts like those of Govs. Bobby Jindal of Louisiana and Sam Brownback of Kansas, and there’s every reason to think a serious national “reform” drive along those lines will produce exactly the kind of backlash these fine governors have engendered.
So bring it all on, please, and remember Waldman’s advice about how to analyze conservative “tax reform” proposals:
[E]very time a Republican says he wants a flatter tax code, the proper follow-up is, “Do you think the wealthy should pay less, the poor should pay more, or both?” I’m not sure what kind of responses you’d get (mostly evasion, probably), but they should be forced to clarify just what it is they’re proposing.