Regardless of party affiliation, most Americans who voted in the midterm elections had something in common — concern about an economy that is not as strong as it should be.
Bipartisan economic anxiety is supported by national polling data. Left and Right remain gun-shy after living through the worst economic downturn since the 1930s. They want to see fundamental improvement in our economy.
Here is where the polls get interesting and a little surprising. They show a broad-based bipartisan desire to see fundamental reform of our cumbersome, complex federal tax system.
Tax reform used to be a topic for policy wonks, but not anymore. A national survey done by the polling firm Public Opinion Strategies before the election shows widespread agreement that the federal tax code is a millstone weighing down our economy and needs to be updated and simplified.
Seventy-six percent of respondents agreed with the statement that “making the tax code simpler and more fair will spur economic growth and opportunity” quicker than any government action. There is a critical mass of public opinion growing in favor of tax reform that the new Congress will ignore at its peril.
That critical mass reaches across party lines. The polling survey invited people to rate seven proposals for stirring economic growth. Simplifying the tax code was No. 1, favored by 92 percent of Republicans and 81 percent of Democrats.
People of all political stripes are frustrated with a tax code that runs on for 74,000 pages and is still growing. This thicket of rules, deductions and tax liabilities is a costly burden for businesses.
And the likelihood of new taxes springing up out of this tax swamp makes companies hesitant to invest. Tax regulations are not simple for individual taxpayers, either. That is why 90 percent of us hire a professional to do our taxes or buy commercial software to tackle the job alone. National Taxpayer Advocate Nina Olson called tax code complexity “the No. 1 most serious problem facing taxpayers.”
I would go further — the most serious problem is not the complexity itself, but how we got that complexity. And it’s not pretty. Our tax code has grown in complexity and size because of new taxes and tax favoritism lobbied into the code, benefiting politically-connected companies and wealthy individuals. Average families pay more taxes to subsidize the politically-connected. With increased complexity, “crony capitalism” has taken deeper root. Growing awareness of that is feeding the national appetite for real reform. With lawmakers finishing the lame duck session with a raft of tax “extenders,” it is evident that favoritism isn’t going anywhere anytime soon without meaningful policy changes.
A coalition of White House officials and congressional members of both parties wants to change the tax code to engineer a tax coup against America’s domestic oil and gas producers. This coalition wants to strip away legitimate business deductions from this industry while leaving them in place for all others, touting comprehensive tax reform with one hand and pursuing policy that accomplishes just the opposite with the other. Tax discrimination against one industry, especially one that has led in job growth over the past four years, is not the route to fairness.
Creating a monstrous tax increase for one industry would inescapably be shared with consumers in the form of higher energy prices. When the complexity of the tax code is manipulated, average families always end up paying the price. And ironically, the energy companies targeted already pay taxes at substantially higher rates than any other industry in the Standard & Poor’s 500 index.
No wonder the patience of American taxpayers is wearing thin. They want real tax reform — not lip service, and not piecemeal policy shifts that take us in the wrong direction in pursuit of political talking points. That means lowering rates on individuals and businesses, while getting rid of complex regulations that allow the tax code to be used as a source of largess for the politically-favored and a weapon against those who are not.
Nobody likes to pay taxes, although we find it easier if everyone is paying their fair share. Real tax reform could move us in that direction and lower the hidden tax of higher prices caused by favors to special interests.
William O’Keefe, chief executive officer of the George C. Marshall Institute, is president of Solutions Consulting Inc. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions for editorials, available at this link.
