Watching the GOP self-immolate on their so-called “tax reform” bill is both painful and sickening. Like so many other efforts, it’s really just a reshuffling of the deck chairs, moving around various deductions and exemptions while barely fiddling with the rates. It’s rapidly turning into a PR disaster with unpopular items such as an exemption on private jets, eliminating deductibility for graduate school, and cuts to Medicare that holy crap will you anger AARP members who actually show up to vote. It’s almost like the GOP got a list of things the Democrats would love them to do to lose big in 2018 and said: “yeah, okay, let’s be the caricature you frequently make of us.”
To be honest, I can’t expect any better when “tax reform” is so aggressively unchangeable. The underlying things that make federal taxation a boondoggle aren’t touched, merely slightly moved around. If you want to see a plan that would actually up end the entire system for the better, here’s what you do.
Eliminate corporate taxes. I know, it sounds entirely nuts. Everyone hates big corporations (I have my own list) and wants to put the screws on them in a populist fervor of sticking it to the man. But then again, most large companies do not actually end up with much of a tax burden. Why? Because they have the means to hire lawyers, accountants, and lobbyists who make sure it stays that way. GE is actually pretty famous for being one of the best at avoiding paying any taxes at all. It’s often the small businesses and sole proprietorships who end up being hit the hardest with double dipping. Eliminating corporate taxes would shift the burden back onto people once the money is paid out from a corporate entity. I know I sound like a stereotypical Republican, but even liberal economists agree with the idea (among some of the others I’m going to bring up). Even complete flaming liberals like Robert Reich and Markos Moulitsas agree with it.
Eliminate almost every single tax deduction (especially the one on mortgage interest). Deductions are the devil’s plaything in tax policy. They’re always being used to try and steer taxpayer behavior in some direction or another and most of them end up favoring higher income tax brackets. The mortgage interest deduction is the worst, a check to people who can afford to buy a home instead of renting one. It’s also absurdly popular. Same problem with deducting the cost of health insurance. Really, deductions allow very narrow interests to carve out special exceptions and complicates the tax code for everyone. And the narrow interests to get those carve-outs are–surprise!–the people who can afford to send a lobbyist to DC. Kill deductions and all of that favoritism magically goes away.
Raise the standard deduction. By a lot. Eliminating deductions and credits would probably make a lot of people feel a big tax bite. Instead of trying to make deductions that most people get and would add up in aggregate to how much you really want them to deduct, just make a decent-sized standard deduction that keeps people under a certain threshold from having any net tax liability. This would greatly simplify the tax code and be a lot less regressive.
Switch to a return-free filing. It’s basically insane that you, under threat of criminal charges and fines, have to figure out your own tax bill or pay a professional to do it.
Once you eliminate deductions, things tend to get simpler. A lot simpler. Return-free filing is the wild idea that since the feds already have all of the information, they should be able to just send you a bill. Bonus, you get to stick to H&R Block after decades of their lobbying to kill the idea.
Replace almost all entitlements with universal basic income. This is probably the most radical of ideas. Under a universal basic income, every person in the country is guaranteed a certain level of income from the government, usually paid monthly. You wipe out TANF, Social Security, almost all of Medicare/Medicaid, HUD… basically everything and just give people the money to spend as they see fit. It’s a drastically simpler system with no eligibility requirements beyond “you live here”. If someone wants to live in a cardboard box and down a bottle of Jack Daniels every day, so be it. If someone else decides they want to quit their job and go to school, basic income is covered.
Implementing these things makes taxes a lot more fair and equitable. There’s no way to lobby additional tax advantages because the only things you can adjust are rates for everyone, the standard deduction for everyone, and the universal basic income for everyone. You don’t have to spend much time at all filing your taxes since you’ll just get either a bill or check depending on if payroll deductions covered it.
Now, who will be bold enough to stand up and press for some real reform?