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.