By Merrie Spaeth
http://stream.publicbroadcasting.net/production/mp3/kera/local-kera-977208.mp3
Dallas, TX –
Congressional Republicans and President Obama remain at odds after weekend meetings with no breakthrough on raising the debt ceiling or reducing the federal deficit. But commentator Merrie Spaeth believes there's an opportunity in all this.
The Republicans and Democrats have agreed to lower their expectations on a deal to vote to raise the debt ceiling (allowing the government to borrow more.) But they still can't agree on the combination of spending cuts, demanded by Republicans, and tax increases or, the language preferred by the Democrats, "revenue enhancements."
I have a middle ground to allow them to vote to increase the debt ceiling and both sides claim victory. Agree to simplify the tax code. The time has come to tackle the monster. The most compelling reason is that the tax code distorts decision making. Well, what does "distort decision making" mean?
Here's an analogy. Imagine you're the coach of the football team. The parents of the quarterback get the league to pass a rule that their kid gets an extra 5 seconds to throw the ball when he's playing on another school's field. The kicker gets an allowance that gets him 5 yards closer to the goal posts, when he's kicking in the 3rd quarter and wearing a knee brace. The line backers get a rule that on alternate Saturdays, they can move when the ref has the whistle half way up to his mouth. The tight end well, you get the idea. The point is, the coach has no idea how to coach the game. The players are confused about how to play the game, and the spectators go home.
The tax code is just as confusing.
The National Federation of Independent Business finds that four of the top ten problems faced by small business involve tax issues. (Remember, most jobs come from small businesses.) It's too long, about 2 feet - thick. It costs billions of dollars and hours to comply and 40 percent of taxpayers are estimated to be out of compliance, meaning we're criminals.
Congress has used the tax code as a way of social engineering, currying favor, grand standing and vote buying. Examples: business meetings in Bermuda can be deducted without showing they were really business, but not in France or China. Body builders can deduct the oil they use to make themselves shine - but not vitamin supplements. You can deduct the purchase and use of a private airplane you use to fly down to check on your island rental condo. And there are, of course, the publicity grabbing items like the $6 billion break the ethanol industry gets.
Here's my idea. Both sides agree that the entire tax code should sunset, that is, end January 1, 2013. There's precedent. The death or estate tax went to zero in 2009. So Congress has a year and a half to start from scratch and write new laws. But, it should take a majority vote to pass a tax change, so no hiding company-specific favors in this bill or that amendment. And, the final piece of the plan: Congress must limited the number of pages of laws and regulations it can write each year. That creates the discipline to choose what really matters.
I figure they'll be broad agreement on continuing deductions for charitable enterprises and perhaps for interest on home mortgages, but the rest is up for debate - and you can bet there will be heated arguments. But that's part of the plan. The American people will get to hear the ideas and their impact and express an opinion. Since it's an election year, tax choices will be election issues.
Both sides will be able to claim victory. The Republicans claim lower tax rates. The Democrats can claim closed "loopholes." The real winners will be the American people and the economy because we will stop decision making that's based on short term thinking about tax advantages.
Remember the old Geico commercial? So simple even a Caveman can do it. See the parallels? Caveman? Congressman? Sort of catchy, don't you think? And certainly very timely.
Merrie Spaeth is a communications consultant based in Dallas.
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