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How to design a coherent tax system

Our code is too complex, unfair, and economically harmful. Fixing it will take a heightened level of care.

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Dean Fosdick/AP/File
This file photo shows the Hortus Bulborum, a museum garden in Limmen Village, The Netherlands. In his book 'The Benefit and the Burden,' Bruce Bartlett suggests that the tax code needs constant tending, like a garden.

The tax code is like a garden. Without regular attention, it grows weeds that will soon overwhelm the plants and flowers. Unfortunately, no serious weeding has been done to the tax code since 1986. In the meantime, many new plants and flowers have been added without regard to the overall aesthetic of the garden. The result today is an overgrown mess. There is a desperate need to pull the weeds, cut away the brush, and rethink some of the plantings to restore order, beauty, and functionality to the garden.

So begins Bruce Bartlett’s The Benefit and the Burden, an excellent guide to the promise and peril of tax reform.

Beauty is too much to ask of any tax system, but order and functionality are fair aspirations. As Bruce documents, however, we fall far short. Our code is too complex, unfair, and economically harmful. And it doesn’t raise enough revenue to pay the government’s bills.

Bruce takes readers on a tour of many crucial issues in designing a coherent tax system. How should we measure income? Should capital gains count? How should the tax burden vary with income? Are all tax cuts and increases created equal? What can we learn from other nations? Should we tax income or consumption? How should we think about the inevitable politics of choosing winners and losers?

Bruce’s writing is clear, concise, and crisp. And he provides excellent suggestions for further reading for those who want to delve deeper (I found several items to add to my reading list).

Highly recommended for anyone wanting a pithy introduction to the challenges of designing a tax system we can be proud of.

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