Friday, December 10, 2010

TAX-CODE REFORM IS YOUR NEW HEALTH-CARE REFORM

I thought the huzzahs for President Obama's plan to overhaul the tax code would come mostly from the Broders and Friedmans, but, alas, here's the usually astute Michael Tomasky with a round of applause:

I had meant yesterday to post praise and link to this excellent piece from TNR by Bill Galston, who argued that the only way for Obama to win in 2012 is to:
...seize the initiative by moving comprehensive tax reform to the center of his agenda. He could argue -- correctly, in my view -- that the current tax code is far too complex, treats millions of average families unfairly, and constitutes an impediment to economic growth. Building on an emerging bipartisan consensus, he could go on to advocate a plan that broadens the base of the system while reducing rates -- a formula that applies to both individual and corporate taxes. And he could challenge both parties to join with him to make a reformed code the law of the land during the 112th Congress.

So conceived and framed, tax reform serves both of the long-term goals -- economic growth and fiscal restraint -- that Obama must promote as the heart of his domestic agenda. Embracing it would enable him to move back on offense and to become the transformative leader he clearly wants to be. And if he places himself at the head of an initiative with substantial appeal across party lines, he could also begin to redeem the promise of a more cooperative, less confrontational politics that first brought him to national notice and helped him become president.
I'd been thinking the same thing....


Oh, please.

This is exactly the sort of thing ordinary people say they approve of -- until they see the details. What?! Where's my mortgage interest deduction? Why is my health care plan taxable now? What the hell?

That's problem #1. And if you don't think it's going to be a problem, go look at this story about a new poll on the deficit. Tax simplification is just like deficit reduction: Americans believe in it in the abstract, but then they hate the details if they think their own ox is going to be gored (and really, you can't blame them):

Americans want Congress to bring down a federal budget deficit that many believe is "dangerously out of control" only under two conditions: minimize the pain and make the rich pay.

(Ah, yes: "make the rich pay." Too bad the public doesn't actually vote against pols who protect the rich. But I digress.)

The public wants Congress to keep its hands off entitlements such as Medicare, Medicaid and Social Security, a Bloomberg National Poll shows. They oppose cuts in most other major domestic programs and defense. They want to maintain subsidies for farmers and tax breaks like the mortgage-interest deduction. And they're against an increase in the gasoline tax....

See, the wonks and centrists and centrist wonks have all sorts of ideas about deficit reduction -- but ordinary people are in no mood for the ones that will affect them adversely. The same thing will be true of any Obama tax overhaul, as soon as details emerge.

You know what else is like this? Health-care reform -- voters want it, but then they don't like any ideas that reduce (or seem to reduce) their coverage or their access to care. (And even ideas that don't affect ordinary citizens adversely can be made to seem as if they're a threat by the GOP noise machine. Think the Republicans and the Murdoch media are going to have much difficulty finding a "death panel" in whatever Obama cooks up for the tax code?)

Here's another way that tax reform is like health-care reform: if this becomes Obama's obsession in the next year or two, it will be another thing he seems bizarrely fixated on, while the public cries out in agony, "We need jobs, dammit!"

This is a terrible idea. This, and not the deal on the Bush tax cuts, could be the thing that finally sinks his presidency. It's disastrously bad politics.

****

How naive is Michael Tomasky about this, by the way? Put something soft under your jaw before reading this:

I, as my regulars know, would hope to see a top marginal rate on really high income ($3 million or more) of, oh, 60% to start; run it up the flagpole and bargain it down from there. But if you're lowering rates on everyone up to something like $200,000, i.e. 97% of taxpayers, you might be able to return to high top marginal rate on Bill Gates, LeBron James and the ex-junkie radio entertainer.

You might? With this Congress? Yeah -- and everyone in America might get a pony, too.

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