Ryan Attempts to Jump-Start Tax Reform

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In a speech given before the National Association of Manufacturers on Tuesday, House Speaker Paul Ryan attempted to put tax reform efforts front and center after months of being overshadowed by the spectacle of repealing and replacing Obamacare, reassuring constituents that Congress is still committed to pushing  forward with a much needed, and long overdue, tax code overhaul.

“We are going to get this done in 2017. We have to get this done in 2017. We cannot let this once-in-a-generation moment slip by,” Ryan said.

The speaker described the current tax code as being “stuck in neutral,” but “applauded President Trump’s principles for tax reform,” principles he hopes will inspire the House and Senate to work together in order to create a plan that is not only transformative but permanent, finally shifting the ship of state into gear and driving the president’s agenda forward. Ryan cited the need for certainty in tax code law so businesses can confidently plan for the future.

“Transformational tax reform can be done, and we are moving ahead — full speed ahead.”

But Ryan is not the only one with ideas about what real tax reform looks like, and members of the Trump administration are hedging their bets by not relying solely on what the House can come up with. They are also seeking input from the Senate.  Currently, several senators are exploring ideas and alternatives.

Regardless of the outcome, however, it will take a concerted effort and a great deal of cooperation (and compromise) between the House and Senate, as well as with the Trump administration, to resolve any differences and come up a proposal that actually benefits both individuals and businesses—and without adding to budget deficits.

Ryan is right to express a sense of urgency; tax reform was a big part of the Trump platform and many people are wondering just when relief will finally come. He is also correct when he says that this is no time for “quick fixes and half-measures,” which is why cutting taxes is not enough.

Tax reform is a necessary first step to a revived economy, but Trump cannot afford to stop there. Why not eliminate the IRS altogether (and for that matter a host of other three letter agencies that are really not necessary for maintaining national health and stability)? There are several reasons why this is important, but allow me to comment on two: simplification and the need to keep the IRS  from being weaponized.

As to simplification, imagine a virtually paperless, formless way of collecting taxes, something like a national sales tax, or flat tax, to fund the federal government and keep it accountable. Imagine not having to keep accurate records, not having to file tax returns, and not having to hire expensive experts to guide you through a process so convoluted that it requires an interpreter—a process that should be so simple it requires no explanation at all.  No more loopholes, no more fines, penalties, or late fees, ever. Sounds too good to be true? Well, it would not really be that difficult; and, the basic infrastructure needed to implement this type of plan is already in place, more or less.

So yes, let’s get it done, and the sooner the better, I say. After all, conservative policy experts have been think tanking solutions to this problem for years. We just need to initiate the best option. So, replace income taxes with a consumption tax (in one scenario), or tax all income equally, regardless of income level. We could then downgrade the IRS to the role of  toothless collection agency and reimbursement center or, better yet, create a newer, much smaller, and more transparent department to oversee the process.

Eliminating the IRS, or downsizing it, would also keep it from being invasive, or less so. It would no longer have access to sensitive personal information and would be prevented from targeting particular political groups or committing  audit abuse.

If president Trump is serious about draining the swamp, he can start with making the IRS obsolete. Of course, once this happens we would have to make this totally revamped method of collecting tax revenue sustainable by controlling government spending and dealing with entitlement programs. But, that is the subject for another post.