I found an interesting piece on the internet. It is attributed as a reproduction of the more detailed policy document A New Tax System circulated by the Honorable Peter Costello M.P., Treasurer of the Commonwealth of Australia, in August 1998. Regardless, what this article had to say to Australians is relevant for what we face today as Americans. It is both timely and accurate.
It says what I want to say only it says it much better than I ever could. It says what needs to be said. I am not advocating an adoption of an Australian plan. But this article clearly and succinctly describes the problems we face and that, apparently, Australia faced as well.
I have reprinted the Foreword and Overview. The entire article can be found here. For simplification, I have substituted America for Australia in the following excerpt.
Tax reform: not a new tax, a new tax system
The tax reform plan set out in this document adds an important new dimension to the…policy framework for securing America’s economic future. It is a framework designed to achieve stronger sustainable growth, higher productivity, more jobs and rising living standards.
Tax reform is not an end in itself. It is an indispensable part of a broader coordinated policy approach that has as its goals greater incentive, security, consistency and simplicity. It also provides for fairer outcomes, greater choice and greater opportunity.
As part of that broader coordinated policy approach, tax reform is essential if America is to be able to achieve its full potential as a nation in the twenty-first century.
The tax reform which is necessary for America...is not reform narrowly focused on establishing a new tax, but reform which delivers a new tax system: a system which is built on a lower tax burden and which is fairer, more internationally competitive, more effective, and less complex.
It is a new tax system that has as its central priorities not only the efficiency and effectiveness of our national economic policy framework but also the sense of equity and fairness that has always been part of the American way.
A tax system for realizing America’s potential
The tax reform plan set out in this document constitutes generational change in the American taxation system. The changes proposed in personal income tax rates and thresholds, in business tax, in assistance for families, in Federal - State financial relations, in simplifying and streamlining the indirect tax system…and in many other areas constitute historic breakthroughs.
Together with other priorities of the government in economic policy making, the new tax system will establish a framework for economic activity in America that is relevant to the twenty-first century...It will enhance America's prospects for growth, investment and job-creating exports in the global economy.
The alternatives to this plan for a new tax system are to either do nothing, or to simply tinker with the existing system by addressing its increasing failings only as they become obviously unsustainable. Both alternatives would serve America very poorly.
To do nothing would be blatant irresponsibility. It would require blanket denial of the way in which the current tax system is failing America. It would also require denial of the changed and changing realities that are now influencing America's economy.
To tinker and respond sporadically to the more obvious inadequacies of the existing tax system would be equally irresponsible. Partial and stopgap remedies would not address the fundamental problems of a failed tax system and would make complexity and compliance difficulties even worse.
The choice is vital for America's future because the taxation system affects all of us.
Choosing a new tax system means refusing to accept the inequities, inefficiencies and unfairness of the current system. It entails a recognition that a modern tax system is one of the keys to America's future economic growth and dynamism.
Choosing to do nothing or trying to patch up parts of the existing system would condemn Americans to a future of higher tax rates...more evasion and avoidance, greater unfairness, more complexity and higher penalties for American exports.
The choice is critical not just for today's generation of Americans, but for the next.
What about this article does not make sense to you, regardless of your economic station or political views?
Real tax reform can address the inequity, non-competitiveness, ineffectiveness and complexity that plague the Internal Revenue Code. Tinkering with the IRC will just continue to make a bad problem worse.
More on this issue coming Friday.