Not to get too far ahead, they tried this in 1986 with the Tax Reform Act, and that turned into the behemoth we have today (read Showdown at Gucci Gulch for the details)
(Washington Post) The Senate’s chief tax writers plan to scrap the entire code and start from scratch in their push for tax reform, and on Thursday they gave lawmakers a month to make a case for preserving some of the $1.3 trillion in breaks on the books.
In a letter sent to all 98 of their colleagues, Senate Finance Committee Chairman Max Baucus (D-Mont.) and his Republican counterpart, Sen. Orrin G. Hatch (Utah), said they would take a “blank slate†approach to the tax code that assumes the elimination of thousands of popular perks, including such sacrosanct policies as the deduction for mortgage interest, the child credit, and the lower rate for dividends and capital gains.
They had a nice flat rate set up in 1986, and then someone said “what about the interest deduction on people’s first mortgage”. Snowballed after that.
However, the letter says, “the tax code is also littered with preferences for special interests. We plan to operate from an assumption that all special provisions are out unless there is clear evidence that they: (1) help grow the economy, (2) make the tax code fairer, or (3) effectively promote other important policy objectives.â€
That brings several problems to mind. First, taxation should not be based on the whims of the elected class who come and go but leave their garbage behind. If the policy is not described in the Constitution specifically, it doesn’t belong.
Second, the only thing that makes the code “fairer” is everyone paying the same percent. Of course, what they mean is sticking it to “the rich”, ie, successful people.
Third, if they truly want it to be fair, it should not pick winners and losers in terms of “growing the economy”, since Congress and the President look at this mostly from political terms.
