“Fixing” the Tax Code: Key Principles for Successful, Sustainable Reform
This economic perspective examines the goals of successful tax reform and how to achieve those goals. The authors define the fundamental goal of tax policy as raising enough revenue to meet the government’s minimal spending requirements without significantly changing behavior in a market economy. The U.S. tax code distorts market decisions, impeding potential economic growth and reduces potential tax revenue. Drawing from their own studies and those of other economic experts, authors find that there is a broad consensus in academic studies on which foundational policies are most likely to promote solid, sustainable economic growth and result in stable tax revenues. Conversely, experts have come to a broad consensus as to which policies are most likely to fail. By lowering rates, broadening the base, eliminating loopholes, reducing spending, ending double taxation, and engaging in international competition, the U.S. can reform for a simple, efficient, equitable, and predictable tax code.