My colleague from TPC Howard Gleckman wrote the other day about the confusion caused by multiple use of defenders of the baselines to measure the effects of tax proposals. But baselines are not really important. What is important is not where we start or change things but where we are.
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Baselines are largely political. Supporters use whatever version strengthens their ability to bludgeon opponents in a game essentially Inside-the-Beltway. Voters, thoroughly confused by this complex and esoteric scorekeeping cannot discover who is telling the truth.
Because a reference database gives you a starting point for allowing to calculate the change, it allows to measure the effects of tax proposals. You can see that a new tax raises earnings compared to a year before, or that it raises taxes for high-earners to what they were paying sometime in the past. But those who often are the wrong questions.
The problem is that these points of departure are completely arbitrary. Nothing intrinsically "right" or "bad" as it was in 2000 and 2003 tax legislation or this year. Nothing does not one of them more or less worthy as a basis for the measure. To assess whether a given policy gives a good result is our lack of agreement on the correct answer. Seems too regressive tax may seem too progressive for you. Federal revenues claiming that 20 per cent of GDP will look roughly higher for people who are interested in small but anemic Government for those who want the Government to do more.
The right question is what makes a particular level design mean for individuals tax and economy.
For example, leaving all 03 2001 tax cuts expire mean federal revenues total approximately $ 20 per cent of GDP in the Decade to come. makes them any permanent cut this to about 18 percent share. This is true, regardless of whether that you start from the base. In contrast, plan of President Obama extend reductions for all but the percentage of 2 win more money from households claim 19% of GDP. Each option would also distribute taxes in his own way to household income categories. This is also true regardless of what you start with the database.
What you need to do is ask yourself these questions: in view of the increasing concerns about explosion of deficits, federal special fiscal policy generate sufficient revenues to finance the Government want? He collect revenues as effectively as possible so that it is the least harm to the economy? And he divided charges enough on the distribution of income? These queries are difficult to answer but rethink their is much more useful to ask whether the taxes will be increase or drop to a baseline, or if it will take more or less income from the pockets of those particular to sometime in the past income group.
Of course, tax policy choices will be always political. And since we have no absolute standard for assessing taxes, assessments of the proposed amendments will be always subjective. But as you listen to the debate in Washington, keep your eyes on the prize: not reference but on where we are.
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