An Apolitical View of the Tax Reform Debate

Much is being made of the Administration’s tax reform proposals.  It’s the usual politicized rhetoric.  Democrats argue it’s a tax cut for the rich.  Republicans argue a small percentage of taxpayers pay a large percentage of taxes so, logically, the largest portion of a tax cut will benefit those paying the most taxes.

Been there, done that.

We’d like to look at the job market to see why it’s a microcosm for what’s at the heart of the tax debate . . . or at least what ought to be.

With all the talk of fairness we seldom hear about accountability.  Where are the arguments about spending tax dollars efficiently and productively?  Eliminate waste.  Make an impact.  Why don’t we discuss these things?  Why do we focus on the income and not the spending?

Most taxpayers hold moderate views.  We’re happy to pay taxes if they fund efficient and productive programs.

So what’s it got to do with jobs?  Where’s the tie-in?

• Princeton economist Alan B. Krueger has linked the decline in employment among men to opioid abuse.  Employers complain they can’t find workers that can pass drug tests.  Traditional tax policy arguments for job creation won’t solve the problem.  Maybe tax incentives ought to address drug prevention, addiction and recovery instead.

• Economists at the University of Chicago have argued that some young men are opting out of the labor force to play video games.  Traditional arguments for and against tax increases or cuts won’t change this behavior.

• Disability benefits might be too generous.  In the last 10 years almost 2,000,000 more Americans are receiving a check from Uncle Sam suggesting some find it a financially lucrative alternative to employment.  Will paying taxes to fund federal benefits make anyone feel good about working hard so that others don’t have to?

The job market tells a larger story.  Traditional tax reform arguments are boring.  Let’s reframe the debate to focus not on the level of income or spending but on where and how taxes are spent – jobs, housing, healthcare, education, etc.  Provide real, meaningful incentives.  Eliminate disincentives.  Unless and until such conversations take place the watered-down tax reform we’ll undoubtedly get will do little to meaningfully impact societal problems.