February 23, 2009 [LINK / comment]
Last week, Congressman Bob Goodlatte introduced the "Tax Code Termination Act" (see his Web site), a bold alternative to the big government liberal agenda of the Obama administration. On Thursday evening, I participated in a telephone conference call with the Congressman and several other people to discuss this measure, and its implications. My overall impression is very positive, and I am encouraged by such fresh, imaginative conservative thinking on fiscal policy, even as the Democrats push through their agenda.
In essence, the measure would "repeal the entire tax code, except portions that deal with Social Security and Medicare by December 31, 2012, and calls on Congress to approve a new Federal tax system by July of the same year." There are 65 cosponsors, Republicans as well as Democrats. As Goodlatte explained,
Americans devote a total of 7.4 billion hours each year to comply with our current tax code. It is unfair, discourages savings and investment, and is impossibly complex. What we need is tax simplification.
...
With three out of five Americans using a paid tax preparer, everyone can agree that the current tax system is broken.
In effect, Goodlatte's bill creates a "countdown clock" that would force Congress to come up with an alternative tax system within six months of the provisions going into effect. That alternative might be either a flat tax with a high deduction/exemption floor, as Malcolm Forbes has advocated, or else the "Fair Tax" on consumption, proposed by Mike Huckabee. (It would be similar to the value added tax in Europe.) As with the confusing situation created by postponement of the deadline for conversion to digital television broadcasting, it is easy to imagine that a last-minute failure to reach a compromise could result in a temporary continuation of the old system, perhaps more than once.
As long as the Democrats have a majority in Congress, of course, chances for the passage of such a measure aren't very high. But the American people need to know that they do have a choice about what kind of tax system they have to deal with. Any number of Democratic-allied special interest groups would immediately objet to such a measure, which would neutralize much of the political leverage that the Democrats in Congress enjoy. Another source of resistance would be the army of accountants and tax lawyers who make a living off the incomprehensibility of the tax laws passed by Congress.
It is worth mentioning that tax reform and simplification -- as opposed to across-the-board tax reductions -- has long been one of the main items on State Senator Emmett Hanger's campaign agenda. See, for example, April 2007.
In the conference call with Congressman Goodlatte, we also talked about President Obama's "stimulus package." I stressed the importance of offering a clear alternative program to what the Democrats are pushing through, so that the Republicans are not seen as obstructionist "naysayers." This radical tax simplification proposal by Congressman Goodlatte serves such a positive purpose, looking toward the future, but the Republicans also need to think in more pragmatic terms about which of their proposals might get passed in the current Congress. The economic situation may not be as dire as President Obama says, but some kind of action is required in the near future. All we can do is hope that enough Democrats believe in the free market system to join with Republicans in passing measures that restore private investor confidence.
Golf superstar Tiger Woods was asked to speak at the inaugural festivities last month, and it was interesting that he didn't even mention the Number One Celebrity: President Barack Obama. Watch it for yourself at youtube.com. Hat tip to Rich Raab.