October 17, 2018

Fiscal Commission

Tax Experts Weigh in on the Fiscal Commission Report

Plenty is being said about Bowles and Simpson’s Fiscal Commission report but we prefer to go with experts on the matter. Some musings from around the tax blogosphere

Joe Kristan loves the zero option, harkening back to the Reagan days:

If no “tax expenditures” were added back, the plan would reduce individual rates to 8, 14 and 23%, with a flat 26% corporate rate. There would be no reduced rate for capital gains, greatly simplifying tax lives for most of us.

This is an excellent idea. I would only apply more of the savings to reducing rates and add a dividends paid deduction to integrate the individual and corporate systems — a huge simplification. Nancy Pelosi isn’t crazfriends didn’t like the first zero option either.

From the aforementioned Tax Policy Center:

[T]his proposal is so provocative it almost seems as if Bowles and Simpson realize they have no chance of building consensus on their own commission. As a result, they may have decided to take their best shot now rather than watch their plan get nibbled to death. If so, it may not have been a bad idea. The fiscal panel may fade away in shame, but I have a feeling this plan may live on.

Tax Foundation’s Tax Policy Blog notes there’s plenty of displeasure to go around:

On the spending side, hawks will wince at the defense cuts while defenders of entitlement spending will dislike the higher retirement age and lower cost-of-living adjustments. One line item calls for all earmarks to be eliminated. Federal employee unions will not like the idea of a 3-year federal pay freeze and a reduction in non-defense employment by 10 percent through attrition.

On the tax side, there are certainly tax hikes for tax-haters to hate: gas taxes, dividend and capital gains taxes, and payroll taxes on high earners. Also, the revenue cap that the chairmen suggest, 21% of GDP, is higher than revenue has been in two generations.

Robert Flach is pleasantly surprised by the report but warns:

By just saying “add back in any desired tax expenditures, and pay for them by increasing one or all of the rates from their zero expenditure low” without limitations or restrictions we all know that the supporters of every single existing “tax expenditure”, as well as proposed new ones, will fund a lobby to throw money at Congress to keep or add their particular benefit. And individual Congresscritters will negotiate back and forth – “I’ll support your tax break if you support mine”. Before you know it we will end up with the same mucking fess we have now!

Meanwhile Dan Meyers needs oxygen:

[T]he report was nothing if not breathtakingly audacious by Washington standards.

Kay Bell notes the contention that has already begun over Social Security:

The debate over what typically is an inviolable government benefits program (remember Dubya’s failed attempt to privatize Social Security?) is going to rage for a bit…Perhaps most of the other members are as upset with the Social Security and tax suggestions as a lot of other people are right now. When the points of view of those 16 other commission members are taken into account, some of the recommendations might change … or disappear.

As Joe mentioned above, Nancy Pelosi hates the report, quoted by The Hill as, “simply unacceptable,” plus we gave you Dick Durbin’s thoughts yesterday.

Personally, we’re fans of the report because if nothing else, it forces politicians to entertain real solutions rather than hide behind the bullshit rhetoric we hear about “tax reform” and “cut spending.” And finally, as Gerald Seib writes at the Journal, there aren’t any more excuses:

By making their ideas public, they made it harder for other commission members to run and hide. The commission now can’t simply bury controversial or unpopular ideas. It has to say to the world that it has rejected them and take responsibility for having done so.

It’s about time.

Dick Durbin Isn’t Buying This Fiscal Commission Report

“I told them that there are things in there that inspire me, and there are things in there that I hate like the devil hates holy water. I’m not going to vote for this thing.”

~ The Illinois Senator doesn’t like the sales pitch from Erskine Bowles and Alan Simpson.