Editorial: Winners, losers and taxes
Whoever wins the presidential election, he should be compelled by necessity and fairness to put tax reform at the top of his agenda quickly, if not on day one. The nation may be divided on who should be president. But consensus is growing among Republicans and Democrats that the tax code needs an overhaul.
It won’t be easy; powerful forces are in place to protect loopholes, deductions and credits and prevent sweeping changes. There would have to be winners and losers. Better that, though, than allow the deficit to continue to grow and make the nation a loser.
One sign of the coming reform is the “Campaign to Fix the Debt,” a group of more than 100 business leaders who support pro-growth tax reform — raising taxes and cutting spending — to reduce the debt. Chief executives from some of the nation’s biggest companies are urging Congress to forge a bipartisan deal to address the national debt.
This is the Bowles-Simpson plan, slowly coming to life. The Fix the Debt organization was founded by Democrat Erskine Bowles, a Charlotte investment banker and former president of the UNC system, and Republican Alan Simpson, a former Wyoming senator. Together, they headed a deficit commission appointed by President Barack Obama.
Some of the “Fix the Debt” CEOs rang the opening bell at the New York Stock Exchange Thursday to demonstrate their support for the issue.
“The only way you solve this thing is with tax increases and spending cuts. You have to do both,” said Honeywell chairman and chief executive Dave Cote, a member of the campaign’s steering committee, in a prepared video. “And anybody who ever says no, you can just grow your way out of this, just raise the top two brackets, just cut spending – it’s baloney. The math just doesn’t work, you have to do both.”
This effort will have to go beyond tinkering with tax rates. Congress must reduce tax expenditures — spending through the tax code with breaks that protect favored industries and causes. This is a bigger part of the budget than most people realize. The Wall Street Journal reports that, in fiscal 2012, the U.S. Treasury collected $1.37 trillion in individual and corporate income taxes, while deductions, exclusions and loopholes added up to $1.09 trillion.
George H.W. Bush famously said once, “Read my lips: No new taxes.” You won’t hear any absolute proclamations like that this fall. The current model is unsustainable, and everyone knows it. Let’s hope the president and Congress have the backbone to tackle the task of fixing this broke system.