Archive for the ‘Politics’ Category

Washington is a horribly corrupt city. The tax code is riddled with special favors for politically powerful interest groups. The budget is filled with handouts and subsidies for well-connected insiders. The regulatory apparatus is a playground for cronyism.

I’ve previously explained that shrinking the size and scope of government is the most effective way of curtailing corruption. Simply stated, people won’t try to get favors and politicians won’t have the ability to sell favors if government doesn’t have power to redistribute income and dictate behavior.

To be sure, this isn’t a recipe for zero corruption. There doubtlessly was corruption in the 1700s and 1800s when Washington was just a tiny fraction of its current size. But it’s a matter of scale. A smaller government means less opportunity for mischief.

Some folks argue that campaign finance laws would be an effective way of curtailing sleaze in Washington. And there are some compelling arguments for this approach.

After all, would we have unsavory examples of corruption like the Export-Import Bank if wealthy insiders from big companies weren’t able to generate buckets of campaign cash for politicians?

But let’s be realistic. So long as politicians have the power to provide subsidies for big business, they’ll have an incentive to offer those handouts. And companies will have an incentive to seek those handouts.

Campaign finance laws might cut back on one pathway to buy and sell favors, but the incentive to cut deals will still exist. Sort of like pressing down on one part of a balloon simply causes another part of the balloon to expand.

But, you may ask, isn’t it worth taking such steps in hopes of at least creating some roadblocks to graft in Washington.

Perhaps in theory, but let’s not forget that it’s very naïve to think that politicians will enact laws that reduce their power or weaken their chances of being reelected. That’s about as likely as burglars being in favor of armed homeowners.

As such, we actually should be concerned that new laws and rules somehow would be structured to make things worse rather than better.

That’s the message of this superb video from Prager University. Narrated by George Will, the video explains why so-called campaign finance rules are not the answer (unless, of course, the question is “how can we give more power to the entrenched political class?”).

Let me add something that wasn’t addressed in the video. Incumbent politicians like the idea of limiting campaign contributions because they start each election cycle with a giant advantage. They already are well known in their states or districts. They’ve already curried favor with voters by engaging in taxpayer-financed “constituent service.” They already get themselves in front of cameras at every opportunity when there’s a ribbon cutting for a new bridge or road project. And they’ve already built relationships with the power brokers in each community.

Challengers, for all intents and purposes, need to spend a lot of money – potentially millions of dollars depending on the electorate – simply to create a level playing field. But if there are laws that limit total spending or restrict contribution amounts, it makes it a lot harder to conduct a credible campaign.

No wonder incumbent politicians so often pontificate about “getting money out of politics.” What they’re really saying is “let’s make it impossible for anybody to threaten my reelection.”

The bottom line is that limits on campaign contributions and other restrictions on political speech make elections less fair.

And they don’t solve the bigger issue of graft, corruption, and sleaze. No wonder they’re willing to impose dozens – if not hundreds – of laws governing public malfeasance and campaign finance. They know that such rules are largely ineffective because much of what happens in Washington is legalized forms of corruption.

Which brings us back to the real issue. If you want less sleaze in Washington, reduce the size and scope of the federal government.

Everything else is window dressing.

P.S. The most pervasive form of corruption in Washington (and, sadly, in many other parts of America) is the moral corruption that exists when people think it’s perfectly acceptable to steal from their neighbors so long as 51 percent of the people approve of the theft. That’s why social capital is very important.

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Sometimes the best way to help the cause of freedom is to stop a bad idea. And that’s why I’m vociferously opposed to a value-added tax.

Here’s what I wrote today for National Review. I start by explaining that it’s a bad idea to give Washington a big new tax to finance a larger burden of government spending.

It’s especially good news that the United States has resisted the value-added tax (VAT), which is tempting because of its revenue-generating capacity. …Hostility to the VAT is justified by the European experience. Back in the mid 1960s, the burden of government spending in Europe was only slightly above the American level. But as VATs were implemented, the welfare state expanded, and now government consumes a much higher share of economic output on the other side of the Atlantic.

European politicians embraced the VAT because it’s the only way to finance leviathan-sized government.

…there’s a limit to how much revenue can be generated by an income tax. As honest leftists will admit (at least off the record), the Laffer Curve is real. …Indeed, income-tax revenues (personal and corporate) average less than 12 percent of GDP in OECD nations. …In other words, the only effective way to finance European-sized government is to have European-style taxation. Which is exactly why the Left desperately wants a VAT.

I then express dismay that a couple of very attractive candidates have inserted this pernicious tax in their otherwise good proposals.

…some conservatives think the VAT is an acceptable risk if it’s part of a bigger tax-reform plan. Senators Rand Paul and Ted Cruz, for instance, both have proposals that would lower personal-income-tax rates, reduce double taxation of income that is saved and invested, and eliminate corporate income taxes and payroll taxes. …Paul and Cruz would offset some of the revenue loss by imposing VATs.

The two Senators actually have good plans, at least on paper. My concern is about what happens once either one of them left the White House.

…something that looks pretty on a blackboard might not be so appealing once you add the sordid reality of politics to the equation. To be blunt, unless there’s a magic guarantee that principled conservatives such as Rand Paul and Ted Cruz (and their philosophical clones) would always hold the presidency, a VAT would be a very risky gamble. …What happens in the future when a statist wins the White House? …Raising the VAT rate would be a comparatively simple option for our hypothetical left-wing president. And because it has such a broad tax base (all “value added” in the economy, including wages paid to workers), even small rate increase would generate a lot of revenue to finance bigger government. …And I’m sure this future statist president also would boost tax rates on the “rich” and also impose higher levels of double taxation.

Incidentally, any good tax reform plan can be distorted by bad politicians in the future. But the downside risk of a VAT is monumentally greater because of its revenue-generating capacity.

…there’s a downside risk to other types of tax reform. But it’s a matter of magnitude. If we did something like Ben Carson’s flat tax or the more incremental tax-reform plans of Jeb Bush and Marco Rubio, it’s obviously possible for a future leftist to undo those reforms, in which case we could degenerate back to the current system. That’s obviously bad news, but it’s not nearly as bad as what might happen with the Cruz and Paul plans. When the wrong politicians got back in charge, they’d restore all the bad features of the income tax and also use the VAT as a money machine to expand the welfare state. And when the dust settles, we’d be France.

I realize that some people won’t believe what I just wrote. Maybe you lean left and you’re used to dismissing my arguments. Or maybe you’re a huge fan of Rand Paul or Ted Cruz and you think I’m somehow trying to knock them down because of some sinister agenda.

So maybe you’ll be more persuaded when a left-leaning columnist reaches the same conclusion. Here is some of what Catherine Rampell just wrote for the Washington Post.

Ted Cruz and Rand Paul have a really compelling tax proposal. …an interesting, serious and provocative idea: a value-added tax. …The VAT is also one of the first proposals out of the International Monetary Fund’s bag of tricks for countries that need to raise money. …it’s good these candidates have given voice to The Tax That Dare Not Speak Its Name. There’s only so much revenue a country can wring out of an income tax system, particularly one as Swiss-cheesed as ours. A well-designed VAT could help get our fiscal house in order.

This must be some sign of harmonic convergence. We both recognize that Paul and Cruz are proposing a VAT, and we both understand that there’s a limit to how much money can be raised from an income tax, and we both concur that a VAT will give politicians a way of dramatically boosting the tax burden.

But we don’t really agree. Because I’m horrified about the prospect of a new tax whereas Ms. Rampell thinks the VAT would be good because she favors bigger government.

By the way, Catherine confirms one of the fears I expressed in my article. The VAT would actually lead politicians to make the income tax even worse because of their fixation on distributional issues.

The main downside of a VAT is that it hurts the poor more than the rich, because the poor spend a larger share of their incomes on basic necessities. There’s an easy way to counteract that problem, though: Just make the income tax system more progressive.

By the way, while she’s right that the VAT is a money machine for big government, I can’t resist pointing out a mistake in her column.

Unlike an income tax, it doesn’t discourage saving or working

No, that’s not true. One of the good features of a VAT (assuming all other taxes could be abolished) is that it would generate revenue in a way that minimizes the negative impact on incentives.

But it would still drive a wedge between pre-tax income and post-tax consumption.

This is also the case for the flat tax. A “good” tax system is only “pro growth” in the sense that it does less damage than the current system.

Just in case you haven’t reached the point of VAT exhaustion, here’s my video explaining why the VAT is such a bad idea.

But if you don’t want to spend a few minutes watching a video, just keep this image in mind anytime sometime tells you we should roll the dice and adopt a VAT.

P.S. None of this suggests that Rand Paul and Ted Cruz should be rejected by voters. All candidates have some warts. I like the Jeb Bush tax plan, but I’m worried by his failure to take the no-tax pledge. I like the Marco Rubio tax plan, but I’m not a big fan of his big tax credits for kids. And I could come up with similar complaints about other candidates.

All I’m saying is that Paul and Cruz have one part of their agenda that should be jettisoned.

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One of the great things about being a libertarian is that you have no desire for government sanctions against peaceful people who are different than you are, and that should be a very popular stance.

You can be a libertarian who is also a serious fundamentalist, yet you have no desire to use the coercive power of government to oppress or harass people who are (in your view) pervasive sinners. For instance, you may think gay sex is sinful sodomy, but you don’t want it to be illegal.

Likewise, you can be a libertarian with a very libertine lifestyle, yet you have no desire to use the coercive power of government to oppress and harass religious people. It’s wrong (in your view) to not cater a gay wedding, but you don’t want the government to bully bakers and florists.

In other words, very different people can choose to be libertarian, yet we’re all united is support of the principle that politicians shouldn’t pester people so long as those folks aren’t trying to violate the life, liberty, or property of others.

And when you’re motivated by these peaceful principles, which imply a very small public sector and a very big private sector and civil society, it’s amazing how many controversies have easy solutions.

Consider, for example, the legal fights about transgendered students.

Writing for Reason, Steve Chapman of the Chicago Tribune highlights a controversy in Illinois.

…in Palatine, Illinois,…the public school district had to decide how to handle a transgender student who was born male but lives as a female. …The school district has largely accepted her identification, letting her play on a girls’ sports team and use the girls’ restrooms. But it draws the line at the locker room, where it says other students must be protected. Its solution is to provide a private space this student must use to change clothes.

This seems like a reasonable compromise, but some bureaucrats in Washington aren’t happy.

This remedy doesn’t satisfy the Office for Civil Rights of the Department of Education, which this week decided that restricting locker room access to “Student A” is a violation of Title IX, which forbids discrimination on the basis of sex in education programs.

But Steve says the bureaucrats are actually being reasonable.

The feds’ solution is a sensible compromise. It suggests that the district provide curtained changing areas, available to all, without forcing anyone to use them.

And this issue isn’t a rare as one might think. Here are some passages from a CNN report, which also agrees that the issue boils down to the provision of privacy curtains in locker rooms.

In 2013,…California became the first state to allow transgender students to choose which bathrooms and locker rooms to use. …a negotiated solution by putting up privacy curtains in the girls’ locker room. Similar arrangements have kept schools from running afoul of anti-discrimination violations. At Township High School District 211, however, the line between accommodation and discrimination came down to this: whether the student would be able to choose to use the privacy curtains, or whether the school could force her to do so.

And here are some excerpts from a separate CNN story from Missouri.

The 17-year-old Hillsboro High School senior wears skirts, makeup and a long wig styled with bobby pins. She even started using the girls’ locker room to change for gym class, despite the school’s offer of a single-occupancy restroom. …it became clear she was not welcome in the locker room. Because Perry has male anatomy, many students simply see her as a boy in a wig changing in the girls’ locker room — and that makes them uncomfortable. …the guidance is pretty clear as far as the federal government and LGBT advocacy groups are concerned: Transgender students should be allowed to use the restroom and changing room that accords with their gender identity.

And if every student has a private changing area, which is what Steve Chapman suggested, there shouldn’t be a problem. Heck, you wouldn’t even need a boy’s locker room and girl’s locker room.

But Steve wasn’t being sufficiently libertarian because there’s an even better solution. Why not simply engage in real education reform, give all families vouchers, and then let them choose schools on the basis of many different factors (academics, convenience, cultural programs), one of which might happen to be how they deal with transgendered students.

Some schools presumably will be very accommodating while others may be rather unwelcoming, and parents can take that information into account when deciding where to send their kids.

Here’s another controversy that could be easily solved with the application of libertarian principles. Voters in Houston recently rejected a law that would have mandated (among many other things) that people could choose bathrooms based on their preferred gender.

Here’s some of what was reported by the New York Times.

…voters easily repealed an anti-discrimination ordinance that had attracted attention from the White House, sports figures and Hollywood celebrities. The City Council passed the measure in May, but it was in limbo after opponents succeeded, following a lengthy court fight, in putting the matter to a referendum. The measure failed by a vote of 61 percent to 39 percent. Supporters said the ordinance was similar to those approved in 200 other cities and prohibited bias in housing, employment, city contracting and business services for 15 protected classes, including race, age, sexual orientation and gender identity. …In Houston, the ordinance’s proponents…accused opponents of using fearmongering against gay people, and far-fetched talk of bathroom attacks, to generate support for a repeal. The ordinance, they noted, says nothing specifically about whether men can use women’s restrooms. …Opponents of the measure…said the ordinance was so vague that it would make anyone who tried to keep any man from entering a women’s bathroom the subject of a city investigation and fine.

Scott Shackford of Reason explains that opponents used emotional arguments against the referendum instead of making a principled libertarian case against government intervention.

The Houston Equal Rights Ordinance (HERO)…ordinance also includes sexual orientation, genetic information, and gender identity. …HERO…is more broad than federal laws, which don’t include sexual orientation and gender identity and have a much more restrictive view of what counts as a public accommodation. …Opponents of HERO warn that if the referendum passes, men will claim to be women to hide in bathrooms and assault your little girls. …There’s no argument suggesting that individual and business freedom of association is being hampered by the law. There’s no argument that we have so many more ways to culturally apply pressure to fight bigoted behavior in the private marketplace that Houston doesn’t need additional laws.

And Shackford makes the key libertarian argument that private companies and private individuals shouldn’t be coerced by the government.

…it’s a shame the ordinance lumps in both government and private behavior. Government shouldn’t discriminate in employment and accommodations for any of these categories, and if that’s all the law did, it would be great. But for private businesses and for private restrooms, leave it to citizens to work out the issues on their own.

In other words, the entire controversy disappears (at least in the private sector) because people would have freedom of association. They could decide to have unisex bathrooms. They could decide to have traditional bathrooms. Or they could be like Facebook and have dozens of bathroom options based on categories I don’t even understand.

P.S. If you want to figure out whether you’re libertarian, there are several tests, ranging from very simple exercises (here and here), to ones that will take 5-10 minutes, or ones that require answers to dozens of questions.

P.P.S. Before answering any of those tests, you may want to read this.

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While his policy ideas are horrifying, Bernie Sanders’ campaign is the source of some amusement.

He claims to represent a different vision, but his voting record according to the National Taxpayers Union is virtually identical to the ratings received by Barack Obama and Hillary Clinton when they were in the Senate.

He’s not even a real socialist, at least if we use the technical definition of this poisonous ideology, which is based on government ownership of the means of production. That being said, Democratic operatives such as Congresswoman Debbie Wasserman Schultz sound like fools on TV because they don’t even know the difference between genuine socialism and big-government redistributionism.

But I will give Sanders credit for his recent challenge to Republicans. He was being badgered about his supposed socialist orientation on a political news show and he turned the question on its head and asked whether Republicans would be willing to identify as being pro-capitalist.

Here’s an excerpt from a report in The Hill.

Sen. Bernie Sanders (I-Vt.) says he’s tired of questions about whether he’s a socialist, asking why more people don’t want Republicans to defend themselves as capitalists. “Look, when one of your Republican colleagues gets on the show, do you say, ‘Are you a capitalist?’” the Democratic presidential candidate said on NBC’s “Meet the Press” on Sunday. “Have you ever referred to them as capitalists?”

I think this is a good idea.

I’d like every single GOP candidate to be asked some version of Sanders’ question.

And if any of them displayed the slightest hesitation before offering a loud and unapologetic “yes” in support of capitalism, that would be a very good indication that they shouldn’t be trusted anywhere close to the Oval Office.

After all, how could anyone support big government over markets after watching these videos narrated by Don Boudreaux, Walter Williams, and Deirdre McCloskey?

Or how could anyone pick socialism (or any other form of coercive statism) after reviewing how market-based economies out-perform big-government economies?

Heck, I repeatedly ask my left-wing friends to identify just one big-government success story. I don’t ask for 10 nations that prospered with large governments. I don’t ask for five countries that might be considered successful examples of statist prosperity.

I just plead with them to give me one case study. And the only response is chirping crickets. Why? Because no nation has ever become rich during an era of big government.

So if any Republican candidate showed the slightest hesitation before extolling the glories of free markets, that person should be booed off the stage.

By the way, I can’t resist commenting on one other part of the story in The Hill about Sanders. The Vermont Senator apparently was asked to identify nations that are role models.

Did he list North Korea and Cuba, countries that actually still have genuine socialism?


Did he list Venezuela or China, countries that have partial government ownership of the means of production?


Instead he picked Denmark and Sweden.

The senator said he admires the social programs in nations like Denmark and Sweden, and he thinks “we can look to those countries” for guidance.

Since both those countries still have large welfare states with high tax rates and lots of redistribution, his answer is somewhat understandable.

But what about government ownership of the means of production and control over the allocation of resources? In addition to having big governments, is there a lot of intervention in markets?

Hardly. Indeed, if you take the data from Economic Freedom of the World and remove the fiscal policy variable (and thus measure the degree to which markets are allowed to operate), then Denmark and Sweden are both among the world’s top-10 nations for free markets.

And both rank above the United States!

So we have two nations that are more free market than America while also having bigger government than America. I’m not sure how to characterize this so-called Nordic Model, but it’s definitely not socialism.

The bottom line, though, is that you get the most growth when you have both free markets and small government. In other words, genuine capitalism.

That’s obviously not the agenda of Bernie Sanders, though I hope Republicans will be forced to answer his question and tell us whether they favor capitalism.

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Give him credit. Most elected officials are content to tinker at the edges, but Governor Jindal of Louisiana actually wants to solve problems.

Look what he’s done, for instance, on fiscal policy.

He sought to abolish his state’s personal income tax, a step that would have dramatically boosted the states competitiveness.

That effort stalled, but he actually has been successful in curtailing state spending. He’s amassed one of the best records for frugality of all governors seeking the GOP presidential nomination.

And he’s now joined the list of presidential candidates seeking to rewrite the internal revenue code.

Since we’ve already reviewed the tax reform plans put forth by Rand Paul, Marco Rubio, Jeb Bush, and Donald Trump, let’s do the same for the Louisiana governor.

Regular readers hopefully will recall that there are three big problems with the current tax code.

  1. High tax rates that undermine incentives for work and entrepreneurship.
  2. Double taxation of income that is saved and invested, reducing capital formation and wages.
  3. Loopholes that hinder economic efficiency by distorting the allocation of resources.

Let’s see whether Governor Jindal’s plan mitigates these problems.

On the issue of tax rates, the Louisiana Governor replaces the seven rates in the current system with three rates, starting at 2 percent. And instead of a top rate of 39.6 percent, the maximum penalty on work and entrepreneurship would be 25 percent.

He also abolishes the marriage penalty and gets rid of the alternative minimum tax (a perverse part of the code that forces people to calculate their taxes a second time, based on a different set of rules, with the IRS being the only beneficiary).

Regarding double taxation, one of the big problems in the current system is that corporate income is taxed at both the business level and the shareholder level. Most proposals seek to fix this problem by reducing or eliminating the tax burden on dividends on households. Governor Jindal, by contrast, would keep that tax and instead abolish America’s corporate income tax, which is probably the worst in the world.

In one fell swoop, that bold piece of reform also solves many other problems. You don’t have to worry about the tax bias of depreciation. You don’t have to worry about the anti-competitive policy of worldwide taxation. And you wipe out a bunch of corrupt tax preferences.

The plan also would create universal savings accounts that would be free of double taxation (a policy that has been very successful in Canada). Jindal’s plan also eliminates the death tax, though there would still be a capital gains tax.

Shifting to loopholes, the disappointing news is that the charitable deduction is untouched and the home mortgage interest deduction is merely trimmed. But the positive news is that the state and local tax deduction apparently goes away. And because the abolition of the corporate income tax automatically gets rid of the loophole for fringe benefits such as health insurance policies, the Governor also proposes to create an individual deduction for those costs.

The net effect of all these changes is that the tax code will be far less punitive.

The Tax Foundation is the go-to place for analysis on the economic and revenue impact of tax reform plans. Here’s what they predicted would happen to the economy if Jindal’s plan was adopted.

Now let’s end with two observations that may be more political than economic.

First, Jindal’s plan is a huge tax cut. About $10 trillion over 10 years according to the experts at the Tax Foundation. In this regard, Jindal is in the same league with Trump, who also proposed a very large tax cut. Paul, Rubio, and Bush, by contrast, have much more modest tax cuts.

This is a good thing, of course, assuming candidates have serious plans to restrain – and perhaps even cut – federal spending. I don’t lose sleep about whether there’s a balanced budget in year 5 or year 10, but a tax reform plan with a big tax cut isn’t serious unless there’s a concomitant proposal to shrink the burden of government spending.

Second, Jindal proposes to have all Americans pay some income tax. That’s the purpose of the 2-percent rate in his plan. His argument is quite explicit: “Every citizen needs to help row the boat, even if only a little.”

This is an appealing argument. While Mitt Romney was wrong in his assertion that 47 percent of the population was part of the dependent class, we don’t want too many people riding in the wagon and thinking government is “free.”

P.S. If you’re curious about Jindal’s position on other policy issues, he has a good track record on education. He implemented some good school choice reform, notwithstanding wretched and predictable opposition from the state’s teachers’ union.

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I’m pleasantly surprised by the tax plans proposed by Marco Rubio, Rand Paul, Jeb Bush, and Donald Trump.

In varying ways, all these candidate have put forth relatively detailed proposals that address high tax rates, punitive double taxation, and distorting tax preferences.

But saying the right thing and doing the right thing are not the same. I just did an interview focused on Donald Trump’s tax proposal, and one of my first points was that candidates may come up with good plans, but those proposals are only worthwhile if the candidates are sincere and if they intend to do the heavy lifting necessary to push reform through Congress.

Today, though, I want to focus on another point, which I raised starting about the 0:55 mark of the interview.

For the plans to be credible, candidates also need to have concomitant proposals to restrain the growth of federal spending.

I don’t necessarily care whether they balance the budget, but I do think proposals to reform and lower taxes won’t have any chance of success unless there are also reasonable plans to gradually shrink government spending as a share of economic output.

As part of recent speeches in New Hampshire and Nevada, I shared my simple plan to impose enough spending restraint to balance the budget in less than 10 years.

But those speeches were based on politicians collecting all the revenue projected under current law.

By contrast, the GOP candidates are proposing to reduce tax burdens. On a static basis, the cuts are significant. According to the Tax Foundation, the 10-year savings for taxpayers would be $2.97 trillion with Rand Paul’s plan, $3.67 trillion under Jeb Bush’s plan, $4.14 trillion with Marco Rubio’s plan, all the way up to $11.98 trillion for Donald Trump’s plan.

Those sound like very large tax cuts (and Trump’s plan actually is a very large tax cut), but keep in mind that those are 10-year savings. And since the Congressional Budget Office is projecting that the federal government will collect $41.58 trillion over the next decade, the bottom line, as seen in this chart, is that all of the plans (other than Trump’s) would still allow the IRS to collect more than 90 percent of projected revenues.

Now let’s make the analysis more realistic by considering that tax cuts and tax reforms will generate faster growth, which will lead to more taxable income.

And the experts at the Tax Foundation made precisely those calculations based on their sophisticated model.

Here’s an updated chart showing 10-year revenue estimates based on “dynamic scoring.”

The Trump plan is an obvious outlier, but the proposals from Jeb Bush, Rand Paul, and Marco Rubio all would generate at least 96 percent of the revenues that are projected under current law.

Returning to the original point of this exercise, all we have to do is figure out what level of spending restraint is necessary to put the budget on a glide path to balance (remembering, of course, that the real goal should be to shrink the burden of spending relative to GDP).

But before answering this question, it’s important to understand that the aforementioned 10-year numbers are a bit misleading since we can’t see yearly changes. In the real world, pro-growth tax cuts presumably lose a lot of revenue when first enacted. But as the economy begins to respond (because of improved incentives for work, saving, investment, and entrepreneurship), taxable income starts climbing.

Here’s an example from the Tax Foundation’s analysis of the Rubio plan. As you can see, the proposal leads to a lot more red ink when it’s first implemented. But as the economy starts growing faster and generating more income, there’s a growing amount of “revenue feedback.” And by the end of the 10-year period, the plan is actually projected to increase revenue compared to current law.

So does this mean some tax cuts are a “free lunch” and pay for themselves? Sound like a controversial proposition, but that’s exactly what happened with some of the tax rate reductions of the Reagan years.

To be sure, that doesn’t guarantee what will happen if any of the aforementioned tax plans are enacted. Moreover, one can quibble with the structure and specifications of the Tax Foundation’s model. Economists, after all, aren’t exactly famous for their forecasting prowess.

But none of this matters because the Tax Foundation isn’t in charge of making official revenue estimates. That’s the job of the Joint Committee on Taxation, and that bureaucracy largely relies on static scoring.

Which brings me back to today’s topic. The good tax reform plans of certain candidates need to be matched by credible plans to restrain the growth of federal spending.

Fortunately, that shouldn’t be that difficult. I explained last month that big tax cuts were possible with modest spending restraint. If spending grows by 2 percent instead of 3 percent, for instance, the 10-year savings would be about $1.4 trillion.

And since it’s good to reduce tax burdens and also good to restrain spending, it’s a win-win situation to combine those two policies. Sort of the fiscal equivalent of mixing peanut butter and chocolate in the famous commercial for Reese’s Peanut Butter Cups.

P.S. Returning to my interview embedded above, I suppose it’s worthwhile to emphasize a couple of other points.

P.P.S. Writing about the prospect of tax reform back in April, I warned that “…regardless of what happens with elections, I’m not overly optimistic about making progress.”

Today, I still think it’s an uphill battle. But if candidates begin to put forth good plans to restrain spending, the odds will improve.

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It’s been a challenge to assess Donald Trump’s fiscal policies since they’ve been an eclectic and evolving mix of good and bad soundbites.

Though I did like what he said about wanting to pay as little tax as possible because the government wastes so much of our money.

On the other hand, some of his comments about raising tax burdens on investors obviously rubbed me the wrong way.

But now “The Donald” has unveiled a real plan and we have plenty of details to assess. Here are some of the key provisions, as reported by the Wall Street Journal. We’ll start with the features that represent better tax policy and/or lead to lower tax burdens, such as somewhat lower statutory tax rates on households and a big reduction in the very high tax rate imposed on companies, as well as a slight reduction in the double tax on capital gains.

…no federal income tax would be levied against individuals earning less than $25,000 and married couples earning less than $50,000. The Trump campaign estimates that would reduce taxes to zero for 31 million households that currently pay at least some income tax. The highest individual income-tax rate would be 25%, compared with the current 39.6% rate. …Mr. Trump also would cut the top capital gains rate to 20%, from the current 23.8%. And he would eliminate the alternative minimum tax. …For businesses, Mr. Trump’s 15% rate is among the lowest that have been proposed so far.

But there are also features that would move tax policy in the wrong direction and/or raise revenue.

Most notably, Trump would scale back certain deductions as taxpayers earn more money. He also would increase the capital gains tax burden for partnerships that receive “carried interest.” And he would impose worldwide taxation on businesses.

To pay for the proposed tax benefits, the Trump plan would eliminate or reduce deductions and loopholes to high-income taxpayers, and would curb some deductions and other breaks for middle-class taxpayers by capping the level of individual deductions, a politically dicey proposition. Mr. Trump also would end the “carried interest” tax break, which allows many investment-fund managers to pay lower taxes on much of their compensation. …The Trump plan would raise revenues in at least a couple of significant ways. It would limit the value of individual deductions, with middle-class households keeping all or most of their deductions, higher-income taxpayers keeping around half of theirs, and the very wealthy losing a significant chunk of theirs. It also would wipe out many corporate deductions. …The plan also proposes capping the amount of interest payments that businesses can deduct now, a change phased in over a long period, and would impose a corporate tax on future foreign earnings of American multinationals.

Last but not least, there are parts of Trump’s plan that leave current policy unchanged.

Which could be characterized as “sins of omission” since many of these provisions in the tax code – such as double taxation, the tax bias against business investment, and tax preferences – should be altered.

…the candidate doesn’t propose to end taxation of individuals’ investment income… Mr. Trump would not…allow businesses to expense all their new equipment purchases, as some other Republicans do. …All taxpayers would keep their current deductions for mortgage-interest on their homes and charitable giving.

So what’s the net effect?

The answer depends on whether one hopes for perfect policy. The flat tax is the gold standard for genuine tax reform and Mr. Trump’s plan obviously falls short by that test.

But the perfect isn’t the enemy of the good. If we compare what he’s proposing to what we have now, the answer is easy. Trump’s plan is far better than the status quo.

Now that I’ve looked at the good and bad policies in Trump’s plan, I can’t resist closing with a political observation.  Notwithstanding his rivalry with Jeb Bush, it’s remarkable that Trump’s proposal is very similar to the plan already put forth by the former Florida Governor.

I’m not sure either candidate will like my interpretation, but I think it’s flattery. Both deserve plaudits for proposing to make the internal revenue code less onerous for the American economy.

P.S. Here’s what I wrote about the plans put forth by Marco Rubio and Rand Paul.

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