Taxpayer Group: Good Starts on Spending, Weak Finish on Taxes in Debt Commission’s Draft Report
(Alexandria, VA) – The draft proposal from the
President’s debt commission is a good starting point for reducing federal
spending, but the panel’s work on a plan for tax reform that’s revenue-neutral
is far from finished. That’s the assessment of the 362,000-member National
Taxpayers Union (NTU), which today provided a brief preliminary overview of the
report. Among NTU’s comments:
- However, the
spending-cap recommendations fall short, by using high Fiscal Year 2010 budget
levels as a baseline and then allowing outlays to grow again too soon.
- The Commission
courageously proposes steps to reduce the size of the federal workforce and
increase cost-burden-sharing for employee benefits such as pensions.
- Although the plan takes
solid steps to control Social Security growth, such as adjusting benefit
formulas, these gains are eroded by introducing a new benefit scheme and
raising payroll taxes.
blueprint mistakenly calls for nearly $1 trillion in net tax increases, instead
of aiming for a “revenue-neutral” approach to reforming the tax system. “One way to win over the American people on any
tax reform plan is to convince them that even though there will be individual
winners and losers, overall the government won’t immediately profit from the
exercise,” said NTU Executive Vice President Pete Sepp. In any case, the
government could see higher revenues simply by designing a system that minimizes
complexity and maximizes efficiency.
summary of the draft envisions capping revenue “at or below 21%” of Gross
Domestic Product (GDP), but elsewhere tends to assume a 21% figure. This is
well above the historical federal average of 18% of GDP, and would constitute
an impediment to economic growth.
Commission commendably foresees abolition of the Alternative Minimum Tax and
moving to a “territorial” corporate tax system, but without deep rate
reductions its call to repeal certain energy tax incentives would amount to the
arbitrary policymaking that plagues current laws.
“Rather than being a day late and a
dollar short, the commission’s draft looks to be a month early and a few
trillion dollars short of the spending restraint Washington must find,” Sepp
concluded. “Still, there are many salvageable elements in the current draft
which can become the foundation for a solid report that tackles the deficit
without trampling on taxpayers. Let the conversation begin.”
The 362,000-member NTU is a nonpartisan,
nonprofit citizen group founded in 1969 to work for lower taxes, smaller
government, and economic freedom. Note:
A more detailed analysis of the Commission’s draft will be forthcoming. The
joint spending-cut report NTU prepared for the Commission, along with other
work on deficit reduction, is available at www.ntu.org.