Our Tax Code Is Broken

by Scott Hodge

THE U.S. TAX SYSTEM is in desperate need of simplification and reform. Over the past two decades, lawmakers have increasingly asked the tax code to direct all manner of social and economic objectives, such as encouraging people to buy hybrid vehicles, turn corn into gasoline, save more for retirement, purchase health insurance, buy a home, replace the home’s windows, adopt children, put them in daycare, take care of Grandma, buy bonds, spend more on research, purchase school supplies, go to college, invest in historic buildings, and the list goes on.

The relentless growth of credits and deductions over the past 20 years has not only knocked half of all American households off the tax rolls, it has made the IRS a “super agency,” engaged in policies as unrelated as delivering welfare benefits to subsidizing the manufacture of energy-efficient refrigerators. Were we starting from scratch, these would not be the functions we would want a tax-collection agency to perform.

Washington needs to call a truce to using the tax code for social or economic goals. Indeed, the tax base has become so narrow that trying to accomplish more social goals via the tax code is like pushing on a string.

Ironically, but perhaps not surprisingly, the sectors suffering the biggest financial crises today—health care, housing, and state and local governments—all receive the most subsidies through the tax code. The cure for what ails these parties is to be weaned off the tax code, not given more subsidies through such things as the First Time Homebuyer’s Credit, Premium Assistance credits, or more tax free bonds.

While tax cuts will always curry more favor with voters than creating new spending programs, Washington needs to call a truce to using the tax code for social or economic goals. Indeed, the tax base has become so narrow that trying to accomplish more social goals via the tax code is like pushing on a string.

Washington can actually do more for the American people by doing less. The solution lies in fundamental tax reform—as has been suggested by parties as diverse as Chairman Paul Ryan and President Obama’s National Commission on Fiscal Responsibility and Reform, chaired by Erskine Bowles and Alan Simpson. As many studies have shown, Americans could be taxed at lower rates—and the government could raise the same amount of revenue—if the majority of tax expenditures were eliminated.

That said, the primary goal of fundamental tax reform should not be raising more money for government. The primary goal should be improving the nation’s long-term economic growth and lifting American’s living standards.

Path breaking research by economists at the Organisation of Economic Cooperation and Development suggests that the U.S. corporate and individual tax systems are a major detriment to our nation’s long-term economic growth. In a major study, they determined that high corporate and personal income tax rates are the most harmful taxes for long-term economic growth, followed by consumption taxes and property taxes.

Unfortunately, the United States has the second-highest corporate income tax rate among industrialized nations and themost progressive personal income tax systems among industrialized nations.

The economic evidence suggests that cutting our corporate and personal income tax rates while broadening the tax base would greatly improve the nation’s prospects for long-term economic growth while helping to restore Uncle Sam’s fiscal health. More importantly, these measures will lead to higher wages and better living standards for American citizens. And that should be the number one priority of any tax policy.

Let’s consider corporate and individual tax reform one at a time.

Corporate Tax Reform Can Improve U.S. Competitiveness and Living Standards

When it comes to corporate taxes, the United States has a Neiman Marcus tax system while the rest of the world has moved toward a Wal-Mart model of corporate taxation. In contrast to our high-rate, narrow-base, and worldwide model of corporate taxations, the basic tenets of this new model are lower tax rates, a broader base, and the exemption of foreign earnings.

In just the past four years alone, 75 countries have cut their corporate tax rates to make themselves more competitive. And, reports the OECD, “there has been a gradual movement of countries moving from a credit [worldwide] to an exemption [territorial] system, at least in part because of the competitive edge that this can give to their resident multinational firms.”

The United States remains far behind on both of these trends. Not only do we have the second-highest overall corporate tax rate among the leading industrialized nations at over 39 percent—only Japan has a higher overall rate—but we are one of the few remaining countries to tax on a worldwide basis.

Two of our largest trading partners—Canada and Great Britain—have already taken steps to make themselves more competitive. For example, Great Britain lowered its corporate tax rate on April 1, 2011, from 28 percent to 26 percent as a first step toward the goal of having a 23 percent rate in 2014. On January 1, 2011, Canada lowered its federal corporate tax rate from 18 percent to 16.5 percent. In 2012, the rate will fall to 15 percent.

Canada and Great Britain—as well as Japan—have also moved toward a territorial or exemption form of taxing the foreign profits of their multination firms. Indeed, of the 34 OECD member nations, 26 have either a full territorial system or exempt at least 95 percent of foreign earnings from repatriation taxes. The United States remains the only country in the OECD with a worldwide system and a corporate rate above 30 percent.

While some critics charge that U.S. corporations pay far less than the statutory tax rate because of the plethora of credits and deductions, a review of IRS data shows that the effective U.S. tax rate for all corporations averaged 26 percent between 1994 and 2008. The effective U.S. tax rate varied across years, ranging from 27.5 percent in 1999 to 22.8 percent in 2008.

However, these figures account only for U.S. income taxes paid on domestic profits and repatriated foreign earnings. When foreign taxes are included—U.S. corporations pay $100 billion annually in income taxes to other governments on their foreign profits—the overall tax rate on large multinationals is close to the U.S. statutory rate of 35 percent. Averaged for all corporations, the overall effective corporate tax rate is between 32.1 percent and 33 percent.

The benefits of making our corporate tax system on-par with the rest of the world’s systems cannot be understated.

Here are just a few of the benefits of corporate tax reform:

Cutting the U.S. Corporate Tax Rate Will Help Put the Country on a Long-term Growth Path. Economists at the OECD determined that the “corporate income tax is themost harmful tax for long-term economic growth,” not only because it increases the cost of domestic investment, but also because capital is the most mobile factor in the global economy, and thus the most sensitive to high tax rates.

Indeed, the report found that “Corporate income taxes appear to have a particularly negative impact on [gross domestic product] per capita.” Lowering statutory corporate tax rates, they determined, “can lead to particularly large productivity gains in firms that are dynamic and profitable, i.e. those that can make the largest contribution to GDP growth.” OECD economists speculate that these are the firms that rely most heavily on retained earnings to finances their growth. Higher taxes mean fewer retained earnings, which means less growth.

Cutting the Corporate Tax Rate Will Lead to Higher Wages and Living Standards. In a world in which capital is extremely mobile but workers are not, most studies find that workers bear 45 percent to 75 percent of the economic burden of corporate taxes. In one such study, R. Alison Felix, an economist at the Federal Reserve Bank of Kansas City, used cross-country data to study the effect of corporate taxes and their interaction on the gross wages of workers. Felix found that “labor’s burden is more than four times the magnitude of the corporate tax revenue collected in the U.S.”

The overwhelming body of economic evidence suggests that cutting the U.S. corporate tax rate will benefit U.S. workers through higher wages, which translate into higher living standards.

According to her model, a one percentage point increase in the average corporate tax rate decreases annual gross wages by 0.9 percent. Translated to U.S. corporate tax collections and wages, this result means that a $10.4 billion increase in corporate tax collections would lower overall wages by $43.5 billion.

The overwhelming body of economic evidence suggests that cutting the U.S. corporate tax rate will benefit U.S. workers through higher wages, which translate into higher living standards.

Individual Tax Reform Can Boost Entrepreneurship, Productivity, and Growth

President Obama has consistently called for higher tax rates on upper-income taxpayers. But the economic evidence suggests that this would be very detrimental to the country’s long-term economic growth. Indeed, OECD economists determined that high personal income taxes are second only to corporate income taxes in their harmful effects on long-term economic growth. And it will shock many Americans to learn that we already have the most progressive income tax burden among the leading industrialized nations.

What that means is that the top 10 percent of U.S. taxpayers pay a larger share of the income tax burden than do their counterparts in any other industrialized country, including traditionally “high-tax” countries such as France, Italy, and Sweden. Meanwhile, because of the generosity of such preferences as the Earned Income Tax Credit and child credit, low-income Americans have the lowest income tax burden of any OECD nation.

Indeed, the study reports that while most countries rely more on cash transfers than taxes to redistribute income, the U.S. stands out as “achieving greater redistribution through the tax system than through cash transfers.” Remarkably, the most recent IRS data for 2009 indicates that nearly 59 million tax filers—42 percent of all filers—had no income tax liability because of the credits and deductions in the tax code.

Contrary to Warren Buffett, the share of the income tax burden borne by America’s wealthiest taxpayers has been growing steadily for more than two decades. The figure above compares the share of income taxes paid by the top 1 percent of taxpayers to the share paid by the bottom 90 percent of taxpayers.

The figure shows that, as of 2008, the top 1 percent of taxpayers paid 38 percent of all income taxes, while the bottom 90 percent of taxpayers paid just 30 percent of the income tax burden. By any measure, this is the sign of a very progressive tax system.


The economic evidence is quite clear that there is a “non-trivial tradeoff between tax policies that enhance GDP per-capita and equity.” The more progressive we make an income tax system, the more we undermine the factors that contribute most to economic growth—investment, risk taking, entrepreneurship, and productivity.

Individual Tax Reform Must Go Hand-in-Hand with Corporate Tax Reform. It may surprise people to learn that the corporate tax system is no longer the primary tool by which we tax businesses in America. More business income is currently taxed under the individual tax system than under the traditional corporate income tax system. It is also interesting to note that for the first time in the history of the tax code the top corporate tax rate and the top individual rate are the same—35 percent. These are key reasons why the individual and corporate tax systems should be reformed together. The neutrality principle dictates that the tax code not bias the way corporate and non-corporate businesses are taxed.

America’s “Rich” Are Our Successful Entrepreneurs and Business Owners. While some people dismiss the effect of high tax rates on business by citing the fact that only 2 percent to 3 percent of business owners pay tax in the top two brackets, the more economically relevant question is how much business income is earned by those in the top tax brackets.

Only about 16 percent of all private business income is earned by taxpayers with adjusted gross incomes (AGI) below $100,000. Another 16 percent of private business income is earned by taxpayers with AGIs between $100,000 and $200,000.

However, fully 68 percent of private business income is earned by taxpayers with AGIs above $200,000—the target range of President Obama’s proposed tax rate increases. Some 35 percent of all private business income is earned by taxpayers with AGIs above $1 million.

Another way of looking at the distribution of business income is to see how many taxpayers at the highest tax brackets have business income. According to Tax Policy Center estimates, more than 74 percent of tax filers in the highest tax bracket report business income, compared to 20 percent of those at the lowest bracket. More than 40 percent of private business income is earned by taxpayers paying the top marginal rate.

While these high-income business owners may be relatively few in number, the data makes it very clear that increasing top individual tax rates would directly impact America’s successful private business owners and entrepreneurs.

Cutting Individual Tax Rates Can Boost Productivity and Economic Growth. After extensive study of the impact of tax reforms on economic growth across the largest capitalist nations, OECD researchers determined that “a reduction in the top marginal [individual] tax rate is found to raise productivity in industries with potentially high rates of enterprise creation. Thus reducing top marginal tax rates may help to enhance economy-wide productivity in OECD countries with a large share of such industries.”

Indeed, OECD researchers find that lower tax rates and higher productivity gains translate into higher economic growth:

For example, consider the average OECD country in 2004, which had an average personal income tax rate of 14.3% and a marginal income tax rate of 26.5%. If the marginal tax rate were to decrease by 5 percentage points in this situation, thus decreasing the progressivity of income taxes, the estimated increase in GDP per capita in the long run would be around 1%.

With our large entrepreneurial and non-corporate sector, such studies suggest that the United States could see substantial productivity and GDP gains from lower personal income tax rates.

Tax Reform Will Reduce Complexity and Dead-Weight Costs to the Economy. In its 2010 Annual Report to Congress, the National Taxpayer Advocate identified tax complexity as the most serious problem facing taxpayers and the Internal Revenue Service, and urged lawmakers to simplify the system. Tax compliance costs taxpayers an estimated $163 billion each year. The corporate tax system alone costs American businesses about $40 billion per year—roughly equal to the cost of hiring 800,000 workers at $50,000 each.

According to a recent Tax Foundation study, the “deadweight” costs, or excess burden, of the current individual income tax is not inconsequential, amounting to roughly 11 percent to 15 percent of total income tax revenues. This finding means that in the course of raising roughly $1 trillion in revenue through the individual income tax, an additional burden of $110 to $150 billion is imposed on taxpayers and the economy.


Tax reform can lead to greater economic growth by liberating taxpayers, businesses, and investors from these burdensome compliance and deadweight costs.


The U.S. tax system is in desperate need of simplification and reform. To be sure, with the deficit now topping $1.5 trillion, many lawmakers may look at eliminating tax “loopholes” and simplifying the tax code as an opportunity to raise more revenues. But increasing the share of the economy going to tax collections should not be the goal of tax reform. The goal should be to promote long-term economic growth and better living standards for the American people.

But there is a real tension in the United States between the desire for a simpler tax code and one that ensures fairness and equity. To be sure, tax reform that broadens the base while lowering marginal tax rates could create the appearance of giving “tax cuts for the rich,” an anathema to many.

We need a new way of thinking about equity in the tax code. We should strive to build consensus around these basic concepts:

  • An equitable tax system should be free of most credits or deductions and not micromanage individual or business behavior.
  • An equitable tax system should apply a single, flat rate on most everyone equally. That way, every citizen pays at least something toward the basic cost of government.
  • An equitable tax code should be simple—which would save all of us time, money, and headache.
  • An equitable tax code should have dramatically lower rates than we have today—in the mid-20 percent range by most accounts, a level that would still raise the same amount of revenue.

Such a tax code would generate a more predictable and stable revenue stream to fund government programs as opposed to the roller coaster revenues we have today.

And, most importantly, such a tax code would be conducive to long-term economic growth, which is one of the keys to fixing the long-term fiscal crisis facing the country.

Mr. Hodge is president of the Tax Foundation. This article is excerpted from his testimony delivered before the Committee on the Budget of the U.S. House of Representatives on September 14, 2011.

Avoiding Lost Decades in America

by Derek Scissors and J. D. Foster

THE WARNING BELLS were sounded in early 2009: The U.S. government had to act swiftly and forcefully to avoid repeating Japan’s painful experience of sustained economic stagnation. The Obama Administration’s policies have failed to this point, and Japanese-style long-term stagnation may well ensue unless a fundamental course correction and decisive steps are taken. The two most important steps are to halt the federal government’s regulatory onslaught and to put the federal budget on a credible path toward balance by cutting spending quickly and steadily.

Japan’s Fall

It is hard to exaggerate the shift in Japan’s fortunes over the past two decades. The Japanese economic miracle lasted over 40 years and saw the country climb out of true devastation from World War II to have the globe’s second-largest economy, as measured by gross domestic product. Many observers thought it was only a matter of time before Japan replaced the United States as the world’s leading economy.

japans_economy_scissors_foster_w20120How times have changed. The conventional wisdom now is that Japan suffered a “lost decade.” Actually, it has been almost two decades, and there is no end in sight to the stagnation. In 2010, the Japanese economy looks to have been smaller than it was in 1992, an incredibly poor result. It is not just a matter of a decline in output; it is also a remarkable decline in total wealth. In 1991, excluding micro-states like Luxembourg, Japan was the fourth-richest country in the world as measured by gross domestic product (GDP) per capita. In 2010, it was no longer in the top 20, was below the average of the Organisation for Economic Cooperation and Development, and would have fallen further but for Europe’s own economic troubles.

The American and Japanese situations are certainly not identical. But there is no reason to think that the United States is magically immune from this scenario if it mimics Japan’s mistakes. America’s economic demise is by no means certain, but neither is its continued prosperity or its leading role in global affairs.

In 2030, if current trends continue, it could be that the United States will have been passed by China in economic size. Worse, if the United States repeats Japan’s mistakes, then America may be at risk of being rendered an afterthought on the world stage, much as Japan is now. At home, a decline in comparative American wealth equivalent to Japan’s would take the average American from over 30 percent richer than the average Spaniard in 2010 to no richer in 2030—equivalent to a $14,000 drop.

Why It Happened

What were Japan’s mistakes? One could point to the Japanese government’s decision to prop up “zombie banks” after the asset bubble popped in 1990, a decision that greatly impeded the healing of the financial sector and thus the economy.

However, the most glaring of Japan’s mistakes has been its fiscal policy. Japan is arguably the world’s most indebted major economy, with public debt close to twice the level of GDP. This is a problem created during the lost decades, not before. Nominal debt soared 170 percent from June 1996 to June 2010 even while GDP declined slightly. Japanese fiscal stimulus has been an utter failure.

The first few attempts at Keynesian stimulus may have been understandable. What extended Japan’s misery was the inability to accept that deficit spending does not stimulate the economy. Every few years, a new twist was added. Each time, the new economic elixir was advertised to remedy Japan’s ailments, and each time more debt built up and more money was wasted.

Even now, deficit spending is considered by some to be necessary if only it is done right this time. Meanwhile, the hard work of shrinking deficits and debt is being conveniently put off until later because economic growth is supposedly too weak now to survive the loss of fiscal stimulus.

Japan cannot anticipate renewed economic growth from either a growing labor force or from more use of land (either agriculture or natural resources). The size of the labor force is declining, and there is little in the way of natural resources waiting to be drawn into production. Thus, Japan must rely on innovation and more efficient use of productive capital.

An oversized government inhibits broad, long-term innovation—for example, through regulatory barriers that kill the incentive to innovate. Japan’s debt is financed almost entirely domestically, which means gigantic sums are shifted from the private sector to the public sector, where the social return on investment is almost nil and the yields paid on the debt are only slightly better. The huge debt and oversized government has sapped Japan’s domestic sources of growth.

It is therefore not surprising that Japan has been desperate for foreign sources of growth. The periods of seeming mild recovery that have occurred in the past 20 years have all been driven by foreign demand. Japanese financial policy has been warped by the attempt to extract growth from others (for example, through exchange rate intervention).

Under President Obama, the federal government has run deficits in three years totaling twice what occurred under President George W. Bush in eight years. The pattern of U.S. government deficits has taken a decidedly Japanese appearance.

But the more serious financial failing is the loss of the Bank of Japan’s credibility. Rather than quietly holding to a consistent policy, the central bank has announced so many different strategies for stimulus that its initiatives are now immediately dismissed.

Lessons for the United States

The Congressional Budget Office estimates that the federal budget deficit in 2011 was $1.3 trillion, matching the 2010 deficit and down just slightly from the all-time record of $1.4 trillion in 2009. Under President Obama, the federal government has run deficits in three years totaling twice what occurred under President George W. Bush in eight years. The pattern of U.S. government deficits has taken a decidedly Japanese appearance.

Part of the explanation for these deficits is the recession itself, which cut deeply into tax receipts and increased government spending through automatic programs such as food stamps and unemployment insurance benefits. But repeated bouts of Keynesian-style stimulus have also contributed substantially, beginning with President Obama’s huge stimulus legislation in 2009. As is now abundantly clear, this approach to recession and recovery has failed as miserably in the United States as it did in Japan.

There are other notable similarities between the Japanese experience and American policy. For example, the Japanese government has repeatedly raised taxes and is considering doing so again. In the United States, President Obama repeatedly urges higher individual income tax rates on savers, investors, and small businesses, as though taxing producers will somehow increase production.

The Japanese economy is rigidly structured, inhibiting its ability to adjust to changing conditions. In the United States, President Obama is advancing a wave of regulatory changes that are inhibiting flexibility and dampening the recovery. From inauguration day until March 2011, regulatory agencies imposed 75 new major regulations (defined as those costing $100 million or more), imposing some $38 billion in new costs annually.

Those are just the regulations through the bureaucratic pipeline. They do not include the ongoing regulatory freeze on economic activity from the passage of President Obama’s health care legislation or the Dodd–Frank regulatory wave falling on financial services.

Do Less Harm

Though much damage has already been done, the American economy is still fundamentally flexible and resilient. What is needed is to jettison the convenient fantasy that deficit spending stimulates the economy and instead adopt a more benign attitude that, for the sake of recovery, Washington should “first, do less harm,” which means: The federal government should rein in spending to restore a degree of confidence in America’s future; the President should stop threatening higher taxes; and, the administration should end the regulatory attack on America’s businesses.

The United States is still well-positioned to turn its economy around and avoid Japan’s fate. If Washington would just do less harm—and if the Japanese government would just do less harm in Japan—each country would enjoy a more prosperous future.

Dr. Scissors is Research Fellow in Asia Economic Policy in the Asian Studies Center and Dr. Foster is Norman B. Ture Senior Fellow in the Economics of Fiscal Policy in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation. The article was originally published as a Heritage Foundation Web Memo on October 18, 2011.

Meeting Human Needs: Georgia Family Council Looks to Civil Society for Solutions to the State’s Most Dire Problems

by Randy Hicks and Eric Cochling

THERE HAS BEEN NO SHORTAGE OF NEWS lately about economic instability, poverty, and government overspending. The debate continues over cutting budgets and the size of government, while at the same time addressing the growing number of people in need, particularly those living in poverty. The critical questions are: Who should respond to the problem?; What is the most effective way to do so?

It’s clear that poverty is a problem in America. It causes tangible suffering in the lives of many people. And it most often leads to more government intervention to deal with the social consequences that follow in its wake. Despite the challenges of the current political and economic climate, these times present a great opportunity to introduce meaningful reforms that address the needs of people without relying on bigger government and more taxpayer dollars to come to the rescue.

Looking back, there has been effective “out of the box” thinking that has tackled poverty and government dependence head on, while making measurable change for the better. In the late 1980s, Gov. Tommy Thompson overhauled Wisconsin’s welfare system making it the first state in the nation to institute work requirements for welfare recipients. The result was a precipitous drop in the number of welfare recipients and an increase in the number of people working.

Wisconsin’s reform became the blueprint for reform across the nation and showed how changes in policy can affect the extent to which government is involved. More importantly, it created conditions for people to achieve self sufficiency and improve their own lives.

Time to Act

If the current economic climate has shown us anything, it’s that government is going broke trying to do too much. It is stretched way too thin as it assumes a greater role in the lives of Americans and attempts, among other things, to address social breakdown and poverty. After trying for decades and spending trillions of dollars, there is little to show for the effort.

Contrary to how conservatives are often portrayed, most do not hold to their beliefs and values simply as a point of preference. Most do not think “I prefer my shirt lightly starched, my coffee black, and my government small.” Instead, they believe their viewpoint most accurately reflects the way the world actually works.

Conservatives have spent a lot of time discussing the failure of government anti-poverty programs, but espousing the principles of conservatism— however eloquently—and pointing out government’s shortcomings are not enough. Conservatives must be intentional in promoting solutions that address poverty and other social problems in a way that upholds the dignity of the individual, promotes personal responsibility, and emphasizes the preeminence of the institutions of civil society (churches and civic organizations, among others) in fighting poverty and promoting human well-being.

Contrary to how conservatives are often portrayed, most do not hold to their beliefs and values simply as a point of preference. Most do not think “I prefer my shirt lightly starched, my coffee black, and my government small.” Instead, they believe their viewpoint most accurately reflects the way the world actually works, while affording individuals the richest set of opportunities to achieve their potential.

These beliefs are often manifested in successfully articulated principles, ideas, and values, but not always in a manner that clearly connects them to human well-being—to how these ideas can translate into greater opportunity and improved lives for the disadvantaged. As a result, the common narrative about conservatives is that they don’t really care about the plight of people; they only care about morality, big business, and the bottom line.

But this doesn’t need to be the case. The message of less government can be coupled with an effort to find meaningful alternatives that are better suited to meet the real needs of people.

A More Thorough Response

Current economic instability in America provides an opportunity for new ideas. Governments are in the red, optimism about the future is low, and the public is being forced to acknowledge that there is a limit to what the government can do. Just as reformers took on welfare in the late 1980s, now is the time to examine public policies aggressively and draw attention to solutions to human problems that make sense.

Governments are in the red, optimism about the future is low, and the public is being forced to acknowledge that there is a limit to what the government can do. Just as reformers took on welfare in the late 1980s, now is the time to examine public policies aggressively and draw attention to solutions to human problems that make sense.

This is the journey we are about to embark upon at Georgia Family Council. Too many of our fellow Georgians are suffering or failing to thrive and we believe that more can be done to improve their lives across virtually all measures of well-being. However, we don’t believe that the solutions or responsibility rests solely, or even mainly, with government.

Instead of waiting around for lawmakers to act or for government bureaucracy to take on an even greater role, we are turning to communities and private groups that are best positioned to address human needs. The idea isn’t just to make government function more efficiently; it’s about reaching outside government to find effective solutions to suffering. It is about turning to groups like Wellspring Living, a private nonprofit in Georgia that, despite receiving no government funding, has managed to develop a holistic and effective approach to restoring victims of human sex trafficking. It is also about turning to groups like the City of Refuge in inner-city Atlanta which has partnered with other nonprofits, businesses, and local government to provide long-term, restorative, and compassionate poverty relief on a very local level.

The initiative we are launching is called “Breakthrough Georgia,” and the goal is to propel Georgia forward as a leading state in the nation on key measures of human wellbeing. This effort will be a multiyear, intensive, research-driven initiative that will gather state and national policy experts, as well as leaders of effective community-based organizations (like those just described), into five working panels. Each panel (family and community, education, financial stability, health and wellness, and justice) represents a key avenue through which one typically passes on his way to a better life. The panels will identify barriers to well-being in their respective area and then propose solutions for helping people overcome these barriers. This phase will be followed by a multiyear implementation and assessment phase.

Each phase of Breakthrough Georgia will be guided by core values that we believe are central to human thriving. These values will inform the entire initiative’s work and include: marriage, family, personal responsibility, faith, education, charity, civil society, responsible government, private property, and free markets.

Why Georgia?

States have historically proven to be incubators of innovation. After all, state government is closer to the people it serves and the problems it attempts to solve. Most often, good ideas originate in states and are then adopted by other states and the federal government. Georgia is a leading state in terms of population, economic opportunity, and demographic diversity. It is also an international hub for business and transportation.

Georgia also faces many challenges that call for the kind of comprehensive public policy approach of this initiative: high unemployment, foreclosures and bank failures among the highest in the nation, public school students that rank near or at the bottom in academic achievement, large prison populations, and unwed births and crime rates that outpace the national average.

Solutions discovered through Breakthrough Georgia will have application across the nation.

Economic Versus Social Conservatism

In recent years, some have perpetuated a false dichotomy between social and economic conservatism, as if the two were independent strains. One of the objectives of Breakthrough Georgia is to dispel the myth that conservatism can be divided in this way. Showing how these two strains work together is vital if we’re going to be successful in offering policy prescriptions that effectively change lives for the better.

For those self-identifying economic conservatives who rightly promote smaller government, freer markets, and lower taxes, the message of Breakthrough Georgia is that those goals cannot be achieved without addressing the root causes of the human suffering (like family breakdown) that drive government expansion.

In our own work at Georgia Family Council, for example, we have found that the socially conservative concern about the decline of marriage is directly related to the size and scope of government. Simply put: As families fail, government grows. Research we conducted with the Institute for American Values found that the annual cost to taxpayers of divorce and unwed childbearing is at least $112 billion nationally ($1.46 billion in Georgia alone).

While government does grow partly because of inertia and the prodding of special interests, its growth can be traced primarily to its attempts to respond to the impact of poverty and family breakdown. For those self-identifying economic conservatives who rightly promote smaller government, freer markets, and lower taxes, the message of Breakthrough Georgia is that those goals cannot be achieved without addressing the root causes of the human suffering (like family breakdown) that drive government expansion.

In addition to breaking down this false dichotomy, we also hope to expand the conservative lexicon to reflect what truly motivates our work: our concern for the well-being of our neighbor. Too often, policy ideas are communicated in ways that give the false impression that conservatives are primarily motivated by a concern for morality or institutions or systems, but not by a desire to see people live well. The use of catch-phrases like “free markets,” “limited government,” and “traditional marriage”—while useful at times—have unfairly obscured a deep concern for the human condition. Breakthrough Georgia will promote a style of communication and language that always relates policy initiatives to how they ultimately will help individuals, families, and communities to truly thrive.

An ideology that correctly diagnoses the condition of people’s lives and what’s necessary for people to do well is important. So too is recognizing the limitations on government’s ability to address these needs. All of this should compel us cautiously forward to act on behalf of people who need help.

Breakthrough Georgia will be a journey to build a comprehensive plan of action that reduces government overreach and relies more heavily upon the strength and compassion of private organizations to measurably improve the lives of citizens in the state. Our hope is that as the initiative moves forward, other states and the nation can benefit from the reforms as well.

Mr. Hicks is President and CEO of Georgia Family Council. Mr. Cochling is Vice President of Public Policy at Georgia Family Council as well as Director of the organization’s Center for Policy Studies.

Get Found: How to Make Sure Your Think Tank’s Web Site Shows Up in Search Engine Results

by Isabel Ysidro

THE WEB IS AN IMPORTANT COMPONENT in the growth of any public policy organization today. It helps think tanks increase their visibility, circulate their research, and spread their messages.

But just being on the Web is not enough. In order to get traffic, gain market share, and get your ideas out, you need a Web site that gets found easily via search engines such as Google.

How Does Content Like Yours Get Found?

The first step to improving the visibility of your organization in search engine results is to ask these questions:

  1. What search terms do people use when they look for the kind of information you have?
  2. Which sites show up in the search engines for those searches? Is your site one of them?
  3. In what searches can you be found?

If you’re a think tank in North Dakota, for example, and one of your main issues is the North Dakota state budget, then you’d want Web users to find your content when they search in Google for “North Dakota budget.” Or, if your organization focuses on the health care system in Georgia, then you’d want to show up when people look for “health reform in Georgia.”

If none of your pages show up in these or similar searches, then it is time to draw up a search-engine optimization plan for your Web site. (In “geek speak,” search engine optimization is often referred in shorthand as “SEO.”)

Get Search Engine Optimized

Search engine companies like Google, Bing, and Yahoo advise that the key to getting good rankings is to develop a Web site with your users primarily in mind, providing them with original and compelling content so that they will want to come back and visit the site regularly. It is also important to make your Web site easy to use and navigate.

Some basics of search engine optimization include:

Focus on Your Customers. The key to generating traffic on the Web is to produce top-quality content that your visitors will appreciate and naturally want to share with others via blogging, social bookmarking, tweeting, and Facebooking.

Give Every Page on Your Site a Unique and Descriptive Title. The page title needs to communicate the topic of the content in order to maximize its search engine visibility.

One of The Heritage Foundation’s most successful papers in terms of traffic is “Understanding Poverty in America,” published in 2004. (You can find it at www.heritage.org/ research/reports/2004/01/understanding-poverty- in-america/.) The title is short, yet descriptive of the content. The paper is about poverty in America and all the main keywords used in the title appear in the paper itself. One of the main advantages of this title is that “poverty in America” is itself a frequently used search phrase.

Colorful titles may catch the eyeballs of readers who see the piece, but that doesn’t mean search engines will find the article. Titles featuring clever wordplay, academic jargon, or unfamiliar colloquialisms run the risk of not being returned in relevant searches.

When crafting the titles of your pages, think of keywords that people are likely to use in search engines to find the type of content you have created. Colorful titles may catch the eyeballs of readers who see the piece, but that doesn’t mean search engines will find the article. Titles featuring clever wordplay, academic jargon, or unfamiliar colloquialisms run the risk of not being returned in relevant searches.

For example, not everybody knows that the Service Employees International Union has branded its picketing campaigns the “purple wave.” So a story about SEIU activities that uses “purple wave” but not “SEIU” in its title will not be very effective. It is not a term that users will likely use in a search.

Tone down the wonkiness of your titles and balance it with the phrases that an ordinary person would use when searching for the information on the Web. For example, many people have probably heard the phrase “smart growth” in reference to a set of policy ideas on urban planning. They are less likely, however, to type “urban growth boundaries” into a search engine.

Note that you can have the best of both worlds—colorful article titles and straightforward page titles that get good results in searches. With the right content management system, you can show one title for the users (typically catchy and short) and another title for the search engines (typically more keyword laden).

The social media news site Mashable.com, for example, recently featured an article titled “Facebook Reveals its User-Tracking Secrets.” The page title shown to search engines, however, was “How Facebook Tracks Its Users,” a phrasing that a user would more naturally type in a search.

Another example is the recent New York Times article, “Facing Crisis, Technocrats Take Charge in Italy.” The title for search engines was “Italy’s Monti Forms New Government.” The search engine title was crafted in the hope of that the article will pop up in searches that mention the name of the new Italian Prime Minister.

Pitch Your Links to Other Outlets. The quality and quantity of links to your pages are critical to getting top rankings. The more quality links you can get from authoritative and trusted Web sites, the higher your rank will be in the search engines.

Pitch your content to local media, other think tanks, and even local blogs—and request them to add a link to your Web site. Be active in social media as it increases the visibility of your content and can be a rich source of links. Search the terms for which you want your content to be found and review the sites that come up. These sites are important because the search engines consider them to be important. Ask those sites, especially if they don’t directly compete with you for the same audience, to mention your article or blog post and link to you.

Link to Yourself. Before you request links from other sites, make sure that your Web site links to its own pages. For example, if a blog post talks of budget and spending, link the phrase “budget and spending” to the relevant section of your site.

Wikipedia provides the classic example of this practice. In Wikipedia articles, any mention of a topic that has a separate Wikipedia page is hyperlinked to that page. If you are a small think tank, you might not have the resources to replicate the extensiveness of Wikipedia’s internal linking, but you can ensure all your important internal pages are linked from within the site itself.

Make Sure Every Page on Your Web Site Can Serve as an Entry Page. Not all visitors come to your site via the homepage. Thus, you need to ensure that the basic navigation links on your homepage are also available on every content page. Users who land on an article about taxation, for example, shouldn’t have to click on the homepage link in order to find links to your other issues.

Focus on Engaging Your Audiences. Google (and other major search engines as well) are working to measure how well you engage the audience in your niche. They look at a number of signals on user engagement, and rank high the sites they consider are most useful to users. Possible signals include users bookmarking a page as a favorite, visiting other pages on the same site, sharing your content in social networks, or returning to the same page later.

Track and Measure Your Success. Use Web analytics tools such as Google Analytics to help you understand the patterns, growth, and opportunities in your traffic. Study your analytics thoroughly and see patterns of engagement in your site. Pay attention to where your visitors come from, what are your most common referring pages, how long your visitors are staying on the site, which content gets the most traffic, and which pages get the least traffic.

Be Patient. Getting good rankings in the search engines takes time to work. Just be sure to incorporate search engine best practices in your everyday operation: Make your titles more keyword-rich using search phrases that people are likely to use, pitch your links to other outlets, and write content that your target audiences want to read.

Ms. Isidro is a project coordinator in the Online Communications Department at The Heritage Foundation.