We need real tax reform, but are unlikely to get it

LaVarr Webb’s Monday Buzz at Utah Policy says:

The harsh reality is that there are unlimited needs and good causes out there on which our tax dollars could be spent. But the line has to be drawn somewhere and that means some deserving people and deserving causes won’t receive funding or services. It’s easy to say, “There should be funding for just this one more program,” but there are dozens of “one more programs” and if we go down that
path very far we ultimately hurt the productive, tax-generating side of society. If we kill the goose we don’t get the golden eggs.”

This is a good argument for considering the taxpayer first. Since the “need” (it’s funny how often desires somehow become needs on both private and public scales) for government services will always exceed available revenue, we need to ask, 1) what can we afford, and 2) how can we stimulate the economy to increase revenues without additional burden on the taxpayer? A third question, that seems to never be properly addressed, is how can we reduce the existing tax burden?

All of our legislative bodies seem to regularly lose sight of question #1. Of course, since our elected representatives reflect our collective ideology, is it any surprise that government fails to address issues of affordability very well when our society has become increasingly oriented to the I-want-it-I-get-it-now mentality, racking up record debt in the process?

While we do have politicians that truly seek to address question #2, far more are focused on attempting to extract the absolute possible maximum from the producing class without actually killing it. Then there’s the class warfare crowd that would gladly kill off the producing class in a cut-off-your-nose-to-spite-your-face maneuver.

Question #3 is only seriously addressed when someone with political capital stands up and makes it a priority. Some give lip service to tax reduction without actually doing anything about it. Still others with a socialist agenda are diametrically opposed to reducing tax burden. When our legislature suddenly discovered additional revenue this year, nobody seriously considered returning it to the taxpayers to whom it actually belongs. No leader made it a priority. Many politicians had marvelous excuses, but the fact of what they did remains.

Having worked in the tax industry, I don’t have a great deal of hope of seeing any meaningful tax reform in the foreseeable future. In my two decades of observing tax policy on many levels, it seems that the pendulum swings one way for a while and then swings the other way for a while, but meaningful change is rare. Developments that are hailed as major are usually only minor. Increases that are minimized as having almost no impact almost always have far reaching long-term costs and problems (take a look at our Social Security system).

Perhaps this view is simply too cynical. I generally like to think of myself as an optimist. But when it comes to tax policy, I’m more of a realist.