Out of the blue today, President Barack Obama followed in President George W. Bush’s footsteps and announced the formation of his own tax reform panel. President Obama should be applauded for taking on the important work of reforming the tax code because it badly needs an overhaul. Hopefully, the Obama tax reform panel can build on the excellent foundation laid by the Bush panel, and that President Obama can then bring the effort home in signed legislation.
President Obama needs to elaborate further on the goals of the panel, its membership, and its processes. This is especially important since his past comments regarding tax policy offer little guidance about the possible focus of the panel, and his announced tax policies to date are more disturbing than encouraging. The panel also needs experts, in addition to those already named, with a deeper understanding of tax policy and political views that balance out the perspective of the group.
To be successful, the panel’s final plan must:
- Lower marginal tax rates on individuals to increase the incentives to work, save, invest and take on risk;
- Broaden the tax base according to sound principles to simplify the tax code and make it less of a factor in economic decision making;
- Reduce or eliminate the double taxation of capital to increase its after-tax returns and improve incentives for business investment;
- Lower tax rates paid by businesses so they can invest more and hire more and to help them compete in the increasingly difficult global marketplace; and
- Stop putting a growing share of the income tax burden on a shrinking portion of taxpayers.
Tax reform focused on economic growth through neutral taxation and on tax simplification is a task that requires and can create a bi-partisan effort worthy of the President’s efforts.