Tax Reform and a Growth Agenda

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I recently came across this article from Art Laffer (http://www.statesmanjournal.com/apps/pbcs.dll/article?AID=2013307280047&gcheck=1) in which he advocates for implementing a consistent internet sales tax across all states as a driver for a national growth agenda. It is an interesting argument, and one I have not favored over time. His point, however, is that the incremental revenue generated by states for internet sales conducted from their state will enable them to re-balance other state tax burdens, potentially freeing retail spending power at the individual level or investment spending at the corporate level. Surely if that were to happen, and he argues that Wisconsin has already passed a statute which ensures that revenue gains will be offset in individual income tax rates, it will create a growth surge. He quantifies it as a $563 billion increase in GDP and 1.5 million new jobs created. Relative to the progress we have seen since the downturn, that is a giant leap forward.

His article is worth a read, and I am interested in your opinion, before and after.

He makes an early point in his argument that the lowest possible tax rate on the largest possible base is the best solution to our tax issues. Here, I couldn’t agree more. Flattening the tax code, reducing complexity, and eliminating special preferences (call them what you will), is the most rational approach we could take. I remain highly doubtful Washington will ever get this kind of traction, if only because the special interests have outsized appetites to keep their own special preferences. Consequently, which lobbyist do you believe will be left out in this simplification process? Again, weigh in on your opinions, but my greatest hope is that Washington moves in this direction and the outcome doesn’t serve to amplify the preferences … the worst case scenario.

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