Do you pay your fair share of taxes? Unless your name is Warren Buffett, you probably feel quite certain that you pay more than your fair share, to make up for the undeserved tax breaks enjoyed by some other cosseted group—the rich, the 47 percent, corporate “fat cats,” welfare “mooches.” (Take your pick.) By design, our tax code is incomprehensibly byzantine, filled with loopholes, tax credits, and exemptions. The ability to manipulate who pays more and who pays less is Congress’s greatest power, Katherine Mangu-Ward pointed out this week in The New York Times. “Politicians use the tax code to reward their friends [and] punish their enemies,” she said. Congress is back at that game, with a major overhaul that dramatically cuts taxes for corporations, businesses, and heirs of multi-millionaires, and punishes blue states, upper-middle-class homeowners, the real estate industry, people with huge medical expenses, even adoptive parents. (See Talking Points and Best Business Columns.) The trillions in business tax cuts will also be financed partly by borrowing money, pushing annual deficits from this year’s $666 billion to more than $800 billion next year and $1 trillion by 2021.
When President Reagan signed the last major tax overhaul in 1986, it was enthusiastically supported by both parties. (See Briefing.) That reform bill was also designed to be revenue neutral, and paid for cutting top individual rates by raising capital gains taxes and eliminating many corporate loopholes and deductions. None of this is imaginable today: Bipartisan cooperation. Democrats agreeing to cut tax rates on the wealthy. Republicans agreeing to increase some taxes on businesses and investors. Fiscal sanity. In our far more polarized era, tax policy—like health-care policy, and everything Washington does—is simply partisan warfare. When the political infighting is over, you can be sure of this: The tax system will be no simpler. Will it be fairer? If you’re a winner. Editor-in-chief