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5/15/2009
Beware of tax hyperbole from the left
In a recent report, the left-wing Institute for Wisconsin’s Future rails about the dangers of a “complex tax system,” and that within that reticular system lay way too many “tax breaks.”
That said, the recommendations of the study make sense. “The Cure is Simplification,” as the report says.- A sunset date, no more than a few years into the future, should accompany all new credits, exemptions and deductions. Setting a date on which the tax benefit automatically expires—unless specifically renewed—would force periodic reviews of all tax breaks.
- A formal process for evaluating the effectiveness of all exemptions should be put in place, including all current tax breaks. This is the only way to know if the tax break is having the economic impact it was intended to have.
- Finally, a moratorium on new proposals, until the previous recommendations are adopted. There is simply no point in adding to the complexity until a more effective and rational way of determining the value of tax exemptions and credits to not only the recipients but to the state as a whole.
[Clue to the motivation here: Note the term “tax break.” Why doesn’t it say “tax benefit?”]
Leaving aside the discussion of the impact of tax and fiscal policy on economic development or any of a variety of end goals, existing multiple credits and exemptions reside in the tax code for a reason. But the reason that’s most important?
Repeat after me… Deductions, credits and exemptions reduce taxes for taxpayers.
Ergo, removing those deductions, credits and exemptions increases taxes for taxpayers.
And you know that’s exactly where the report is going when it attempts to detail, as IWF phrases it, “the cost of tax breaks.” (Why don’t they call it “the benefit of tax breaks?”) Total cost? $5.2 billion.
Here’s what’s missing from those recommendations up there. Sunset, evaluate or moratoriate to your heart’s content. But when all is said and done, make darn sure total revenues are lower than when you started. Be assured, that’s not what these guys at IWF are looking for. Tax reform. Tax simplification. Tax study. Tax review. Tax whatever. All thinly veiled metaphors for TAX INCREASES.
Jo Egelhoff, FoxPolitics.net
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