Tax experts agreed Tuesday that comprehensive tax reform will help boost economic growth, with one expert suggesting the best way to achieve this is to “toss out” the current tax code and start again.
Michael Boskin, economics professor and Hoover Institution senior fellow at Stanford University, told members of the Senate Finance Committee during a hearing titled “Tax Reform, Growth and Efficiency” that likely there’s a “large payoff to a better tax system,” noting the “tremendous opportunity to improve the federal system of corporate and personal income taxation in a manner that will significantly boost economic growth.”
To be sure, Boskin said, “regulation, trade, education, training, immigration and monetary policies can also promote or hinder growth, but tax and spending — and therefore debt — policy reforms are likely to be the most potent.”
John Diamond, a fellow at Rice University’s Baker Institute for Public Policy and CEO of Tax Policy Advisers LLC, agreed that “sweeping reform of the tax system is well overdue,” stating that “given the fiscal crisis facing the United States, fundamental reform must minimize the distortionary effects of taxation wherever feasible, seek to maximize long-run economic growth, and make simplicity a more important goal to achieve reductions in compliance and enforcement costs.”
Diamond told members of the Senate Finance Committee that replacing the current corporate and individual income tax system with a “consumption-based tax would be best.”
Political analyst Greg Valliere noted in his Tuesday commentary that tax reform is indeed “coming,” and that while getting “true reform is a maddeningly glacial process in Washington,” the first hurdle of agreeing that something must be done has already been surpassed.
“Everyone agrees the tax code is broken,” Valliere, of Potomac Research, said. “The great news,” he continued is that Rep. Paul Ryan, R-Wis., chairman of the tax-writing House Ways and Means Committee is “sticking around” and not running for president.
Said Valliere: Ryan “can move a corporate reform bill in his committee this year; it will be a bill to watch, the first step in a process that could produce corporate and individual reform in 2017.”