Daniel J. Mitchell

I shared my thoughts about tax reform with the Senate Budget Committee earlier today.

Not surprisingly, I testified that the ideal tax system should have the lowest-possible rate, no double taxation of income that is saved and invested, and no corrupt and inefficient loopholes. In other words, a flat tax.

You can peruse my entire testimony on the Cato website.

In addition to talking about the flat tax, I also focused on the importance of economic growth – something that will be less likely if the tax burden is increased. Here’s a table from the Congressional Budget Office’s recent Economic and Budget Outlook, showing how even tiny differences in economic growth have a big impact on tax revenue.

Another point I made is that the government will collect more revenue, even if tax rates stay the same.

Here’s a chart from the CBO long-run forecast, showing how the burden of taxation will climb in coming decades.

And here’s a chart showing how income tax receipts will reach record levels – even if the 2001/2003 tax cuts are made permanent.

One last point. I was impressed by Senators Ron Johnson of Wisconsin and Sen Kelly Ayotte or New Hampshire. I hadn’t seen either of them in action.

Daniel J. Mitchell

Daniel J. Mitchell is a top expert on tax reform and supply-side tax policy at the Cato Institute.

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