Ron Wyden podcast on his flat, fair tax reform

Over at the Tax Foundation, Senator Ron Wyden was interviewed for the Tax Policy Podcast.

"I just think the tax code is a mess. If you look at the fact that there have been 14,000 changes—three for every working day since the last tax reform bill—then you can start the reform cause right there," said Sen. Wyden. "I want everybody in this country to have a chance to accumulate wealth... But that's just not possible when you try to wade through the tax code."

Listen to the MP3 (7.2 mb) right here. Head on over to the Tax Foundation for more info.

Discuss.

Comments

  • (Show?)

    Ugh. Let me continue to repeat what I've said before about this. The reason the U.S. tax system is such as mess is because:

    1) It's based on taxing income, which is gross proceeds less legitimate expenses spent to acquire those proceeds. What exactly is "legitimate" is a huge amount of the tax code.

    2) It's used to create special earmarks as porkbarrel. Any economist will tell you there's no difference between getting a million dollar check from the Government courtesy of your local Congressman (ever so thankful for your campaign contribution), and being given a special only-for-you tax giveaway/"rebate". But the politics of the latter is much easier for the corrupt GOP to push through, because they can make it seem like just anyone can get these kinds of special favors. When in 2001, Enron gets a perfectly legal tax "rebate" of $381 million for 1996 through 2000 (even though it didn't pay any taxes at all for 3 of those 4 years), you know you're seeing legalized graft.

    Senator Wyden's (and all other) "flat" tax proposals do not actually address these two systemic issues with the income taxes. They only make the system even more plutocratic than it already is, and leave it open to futher abuse by corrupt members of Congress.

    The real solution is to do the hard work of publicizing and attacking corporate welfare, account for tax expenditures (i.e. tax loopholes) as any other form of government expenditure, prohibit corporations caught cheating on their taxes from receiving any government contracts for a minimum of 10 years, throw officers of corporate tax-cheats in jail, and dramatically boost the number of IRS field agents to catch income hiding.

    The irony is that if the U.S. could force everyone to pay what they actually legally owed, we could lower everybody elses taxes by 20% But of course, the idea of actually just enforcing the laws we have on the books already is simply unthinkable.

    Not when tax cheats overwhelmingly support the GOP.

  • KISS (unverified)
    (Show?)

    I think Steven is on the right tract..If his percentages work out. I support the Wyden flat tax proposal, in that it simplifies and does away with the laborious work of computing your taxes. Today it is so complicated one must pay a tax-preparer a hefty sum to compute the taxes. Even the software one can buy can have glitches, Holding the tax-cheats responsible should be a high priority no matter what format we use.

  • BlueNote (unverified)
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    I did not listen to the podcast. Does Wyden have a suggestion on how to move towards a a flat tax system without affecting the home mortgage interest deduction? Cancelling or substantially scaling back the home mortgage interest deduction sounds like political suicide to me.

  • (Show?)

    The home mortgage interest deduction is very popular and proposing to get rid of it would probably be political suicide. Nevertheless, it would be good policy.

    The mortgage interest deduction has nothing to do with making housing more affordable. All it does is allow people to buy bigger houses than they otherwise would.

    Imagine if we had a auto loan interest deduction. Do you think it would help poor people buy a car, or do you think it would mainly allow more people to buy bigger, more expensive and fancy cars? If you support the mortgage interest deduction, why not the auto loan interest deduction. All the arguments for and against both are basically the same.

    Incentivizing and subsidizing people to buy bigger and more expensive homes is basically the same as incentivizing and subsidizing people to buy Hummers, Cadillacs, and Lexuses.

    Both are or would be bad for the environment, by subsidizing more consumption, waste, and energy use than is necessary.

  • (Show?)

    The mortgage deduction is preserved, I believe, as is the tax credit. (That's from memory, so don't shoot me if the latter is axed).

    I think the main point of the idea is not so much making taxes simpler (although it does), as making them fairer. The two key imbalances to taxation right now are the disproportionate amount paid by individuals as opposed to corporations, and the disproportionate amount paid on wage income as opposed to investment income.

    Reward people, not buildings. Reward work, not interest.

    If the priorities are restored to a previous age, we could have that AND keep individual margins much lower than they were even as late as Reagan.

  • Susan Watkins (unverified)
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    When I think about flat taxes, I often think about a lesson Jesus taught in the Bible. (I'm not a fundamentalist, but sometimes it's interesting to read this stuff.) It's about the woman who put her one coin in the tax collector's basket. Jesus makes the comment that this woman has paid the most because she gave all she had. Jesus knew that a graduated tax was the only fair tax. In another part of that Bible, the apostle Paul writes in one of his letters that the reason we go to work is so that we'll have something to give to someone else who is in need. That sounds like what our taxes today should be used for.

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