Tax Reform Won't Solve All Our Problems

Both sides on Capitol Hill are embracing the idea of tax reform as a solution to the deficit crisis. John Boehner recently assured us that simplifying the code would "support economic growth," improve efficiency, and generate more revenue besides. "That’s the Washington consensus on tax reform: It slices, it dices, it cleans up after itself," quips Ezra Klein over at Bloomberg. "But that’s not the economic profession’s consensus." No, economists mostly believe that reform, while nice, won't do much to promote economic growth.

"I am not familiar with any tax reform that raised growth, here or anywhere else," one former Reagan adviser says. Basically, the economists say that unless you're actually reducing total taxes—rather than performing a revenue-neutral cleanup—it won't contribute much to growth. Many economists are optimistic that it would improve efficiency, and "everyone agrees that it can help a bit," Klein says. But its main benefit is that "it gives Republicans a face-saving way to do what needs to be done: raise taxes." Click for his entire piece. (More tax reform stories.)