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Reform tax code, reduce the debt

By Jim Woodward
Special to the Observer

We love to complain about our taxes – it’s as American as baseball and apple pie.

Many people stay up late on April 14, trying to make heads or tails about which deductions or exemptions they qualify for, and why the government is incentivizing certain kinds of behaviors in the first place. As a result, both Republicans and Democrats hold out tax reform as a panacea for what ails the economy and our public finances. And there are good reasons why everyone, regardless of where they fall along the political spectrum, can support reform of our convoluted tax code.

Those on the left want a code that’s more progressive – meaning the wealthy pay a higher percentage than those at the bottom of the income scale. They also want to raise more revenue for domestic programs that invest in priority areas such as infrastructure and education.

Those on the right want to reform the tax code in order to smooth out those economy-distorting loopholes, which they contend will promote economic growth. They are open to reform that decreases the deficit, but generally only because of faster growth, not higher taxes. They want more efficient collection, so that marginal rates are kept the same or lowered from where they are now.

These are all good reasons to reform the code. For me, as a member of the North Carolina state chapter of the Campaign to Fix the Debt – a national, non-profit and bipartisan organization advocating an “everything on the table” approach to tackling our federal debt problems – the most important objective is to reduce our deficit. Ideally, federal tax reform could be part of a “grand bargain” – one that also includes reforming our entitlement programs to stem their rate of cost-growth and make them more sustainable and reining in spending for wasteful or low-priority programs.

Regardless, many of the goals for tax reform on the left and on the right do not contradict one another. There is ample room for a truly bipartisan tax reform bill.

While the state legislature should get some credit for tackling the issue in the bill it passed last month, I hope that our representatives in Washington do better in crafting a truly bipartisan bill, one that members of both parties can support. Unfortunately, the partisan warfare in North Carolina has been cranked up to such levels that nearly every bill that passes, including the tax reform plan, is loved by Republicans and loathed by Democrats.

It may seem strange to look to Washington for bipartisanship and cooperation. But there are signs that rewriting the tax code could be one area where Congress shows leadership on this front. The respective tax-writing committee chairmen in the House and Senate – Dave Camp, R-Mich., and Max Baucus, D-Mont., – have spent the last few weeks on a national “Tax Reform Tour” promoting the benefits of simplification and soliciting input from families and businesses on what they’d like to see in the way of reform. They recognize that there is no reason a tax reform bill can’t be crafted to meet the objectives of both parties: promote economic growth, increase progressivity, broaden the base, lower rates and decrease the deficit.

Reaching a meaningful deal on our national debt will take compromise and courage, two qualities that seem particularly elusive in today’s politics. And yet I still hold out hope that our elected leaders in Washington will realize that putting the country on a more sustainable fiscal path would be good for all Americans and good for their political futures as well.

If you would like to learn more about what the Campaign to Fix the Debt is doing to bring people from North Carolina and across the country together on this crucial issue, I encourage you to go to wwww.fixthedebt.org.

Jim Woodward is a former chancellor of UNC Charlotte and a member of the North Carolina state chapter of the Campaign to Fix the Debt.
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