Sometimes you just get the feeling that the various people with whom you’re arguing all got together a few days ago and agreed on a talking point. (Fans of the wonderful Costa-Gavras movie “Z” will know of what I speak: “lithe and fierce as a tiger…”)
In almost every single debate I’ve had regarding the President’s budget plan, when confronted with the fact that they have thus far refused to accept new tax revenues as part of a deal for deficit reduction, conservatives cry foul. To the contrary, they cry. They’d be happy with far more revenue than the $1.5 trillion called for in the President’s budget. But it must come from “lowering the rates and broadening the base.”
For example, I’ve heard many say they want to follow the recommendations of the Bowles-Simpson commission, which goes way–and by “way” I mean half-a-trillion bucks–beyond the President in terms of revenues.
Can this be for real? I’d really like to believe it is, but it’s awfully hard to imagine. First, it breaks the Norquist pledge, or at least it does if it’s revenue neutral. Grover’s been a bit muddy on this point, but I’m pretty sure he won’t let his minions raise taxes over here to pay for a cut over there.
And, of course, that’s what we’re talking about here. “Broadening the base” means some win and some lose. Those not benefiting from the credits and deductions that base-broadening gets rid of come out ahead. Everybody else pays more. And for the record, simply recouping the revenue you lose by lowering rates through the broader base isn’t enough. Our fiscal reality is that these plans must be revenue positive, not just revenue neutral.
Fact is, as Bowles-Simpson revealed, there’s real money here—tax expenditures now amount to over $1 trillion per year. There’s the mortgage interest deduction, the exclusion of employer health premium contributions, 401(k) contributions, accelerated depreciation for equipment purchases, capital gains tax breaks, and tons more.
Now, it’s absolutely true that many of these should go, as I’ve stressed in these pages before. And if my conservative friends truly want to stand up to Grover, engage in some 1986-style brush-clearing in the tax code, and raise even more revenue than the President, then I will gladly fight alongside them.
So, here’s a real time test. Treasury Sec’y Geithner today announced that the administration was ready to propose corporate tax reform “…that will lower rates, broaden the base and eliminate or wipe out…dozens and dozens and dozens of special tax preferences for businesses.”
If the people touting this meme of lower rates, broader base stand up and applaud the reform, I’ll take them a lot more seriously than I have thus far. If they do not, I will remind them of their refusal to do so next time we speak.