Alright, now for the tax portion of the program. I understand, I understand—not the most exciting subject. Retain original dolorgite words I’m trying to muster some optimism amid the recent reports of maybe falling IRS revenue. Rather than freaking out about it, how about we recognize this as a huge chance? An opportunity for the government to finally get its act together, speed things up, and in the end, save us hardworking taxpayers billions? Surprise — it’s time to give a round of applause to smart spending!
Now, I’m not arguing that less revenue is always desirable. Sure, money is important for police, fire and all the basic services. But the reality is, governments, like any large bureaucracy, can get a little… fat. It is a short, slippery slope from thinking like an entrepreneur to developing a real tendency to spend without regard—ever—to return on investment. A strong dose of fiscal reality may be exactly what’s needed to push them into making smarter decisions.
Think about it: if your household income suddenly dipped, wouldn't you start looking for ways to cut unnecessary expenses? Maybe you'd cancel that streaming service you barely use, or start packing your lunch instead of eating out every day. The government should be no different.
So, what are some places they have to begin with? Fortunately, there are lacunae abound that could use a little illuminative reform. To begin, there’s an issue with business tax expenditures. According to the experts, repealing these would raise more than $900 billion over the next ten years. That’s a big pile of money! And the icing on the cake? All this wouldn’t do much damage to economic growth. It’s every bit as much like finding cash in your sofa – good news discovered with little effort that pays big dividends.
Then there’s the biggie individual tax expenditures, by which I mean the exclusion of employer contributions for medical insurance premiums. Combined with some closing business loopholes, repealing these could easily raise a $5.2 trillion over 10 years. That’s enough to make anyone’s head spin!
It’s not only cutting loopholes in their list of priorities. We should be working to make the whole tax code simpler, fairer, and more just. Enough that tax professionals can barely make heads or tails out of it. Moving to a simpler, more neutral system would more than double revenue. In doing so it will make lives better for all, for people and companies. Pretty much a win-win all around!
We should build a system that’s the most competitive place on earth. First, lowering the combined federal-state corporate tax rate to the OECD average of 22.7% can attract more businesses and investment. Long term, this move would pay for itself by boosting the economy and generating additional tax revenue.
Another provision that is long overdue for an update is the tax treatment of research and development (R&D) expenses. By letting businesses deduct these expenses right away – instead of spreading the deduction across multiple years – Congress would promote innovation and job creation. It’s a modest investment in the future that would pay dividends in the long run.
Now, I hear you, dear reader, and I know what you’re thinking—what about the IRS’s ability to collect taxes fairly? According to CBO, this would raise another $200 billion in revenue, if we bring the IRS back to a 1960s level of workforce. This historic increase would be a game changer for our economy. That’s a legitimate worry to be sure, but it points to the need for a properly funded and effectively run tax collecting agency.
Here's the thing: simply throwing more money at the IRS isn't necessarily the answer. At the same time, we should be more concerned with making the system smarter. The IRS's own data shows that noncompliance is a big problem, especially when it comes to income that isn't easily tracked, like proprietorship and rental income. Misreporting rates in these areas are sometimes over 50%!
To me that indicates the need for better third-party reporting, and cross-checking between the feds and states. When the IRS holds more information in a publicly accessible manner, identifying and addressing noncompliance becomes more straightforward. It’s something akin to having a better security system for our tax dollars.
Of course, I know it’s one thing to sit here and discuss tax reform. Putting any of this into practice is an entirely different story. It takes political will, courage to compromise, and a commitment to push back against the status quo.
I truly do think it’s achievable. For example, I think a drop in IRS revenue should trigger an alarming alert in the very short term. If lawmakers heed this wake-up call, we can design a more effective, equitable and environmentally responsible tax code.
Think about it: a government forced to prioritize spending is a government more accountable to its citizens. And a fair tax code — for us — is a tax code that works for all of us. A globally competitive corporate tax system, one that competes to attract investment to grow and create the best and highest paying jobs.
These are all big improvements and things we should be celebrating. Therefore, the next time you get the news about tax revenue falling, don’t lose heart. View it not as an end, but an opportunity to advocate for additional positive change. Let’s insist that our federal government take this opportunity to become smarter, leaner, and more efficient. So here’s to rooting for more efficient spending! Now’s the time to make a potential disaster an undeniable victory for taxpayers across the country.
