Jun 09, 2004
Undoing Reagan’s Legacy
One of Reagan’s greatest achievements was passage, with bipartisan support, of the 1986 Tax Reform Act. The goal of the landmark bill was to make the tax code simpler and fairer while boosting economic efficiency. Loopholes were closed, tax rates were reduced, and all sorts of distinctions were eliminated so that individuals and companies with the same income or profits were required to pay roughly the same tax.
Those principles, however, are violated on nearly every one of the 930 pages in the recently passed Senate tax bill and the 398-page draft released last week by the chairman of the House Ways and Means Committee, Bill Thomas (R-Calif.).
With a few exceptions, both bills are grab bags of special-interest provisions designed to reward the well-connected at everyone else’s expense. They reward companies that have played cynical tax games and open up new vistas for the tax shelter industry. And while claiming that the purpose of the exercise was to create jobs in the United States, they will only enhance existing incentives for U.S. companies to earn their profits overseas.
Worse still, they are almost certain to add billions each year to a federal deficit that is already too high.
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