A Tax Reform to Cut Complexity, Increase Fairness

Sooner or later the U.S. tax code will be reformed. Probably sooner. Raising revenue will be the main motivation, but issues of fairness as well as the complexity of current tax rules and their adverse effects on the economy will also be prominent. So far the debate has focused on scaling back provisions of the tax code that have favored activities traditionally deemed valuable. There is talk of reducing relief for charitable contributions, taxes paid to state and local governments, home mortgages, employer-provided health insurance and more. Reasonable arguments can be made in each case. But taking only the “limit tax incentives” approach to reform has several major defects.