Congress adopted a budget last week, paving the way for the introduction of a tax bill, and the White House responded (as it is wont to do) with a tweet. "Budget passes house," it read. "Momentum for tax cuts growing. #TaxCuts #TaxReform."
Sadly, this message betrays a confusion that does not bode well for the prospects for smart tax reform. Tax cuts and tax reform aren't the same thing. Tax reform is vital to strengthen the economy. Cuts without reform — meaning higher government borrowing and a shakier fiscal position — will weaken it.
The basic approach should be to broaden the tax base, lower the rates, and avoid distorting economic choices in unintended ways. The current code encrusted with pointless complexity; a simpler system could bring improvements in growth, wages and living standards — but wise reformers wouldn't take that for granted.
Reform should also aim to make the system as fair as possible. This means adjusting the burden among different groups of taxpayers — always remembering that one person's tax cut is someone else's tax increase.
As this quarrel grinds on, it's helpful to remember three things. First, tax reform is about the promise of long-term growth for the economy as much as the immediate consequences for any particular tax bracket. Second, any reform plan should be judged as a whole, not praised or denounced item by item. And most important, the goal here — and accompanying hashtag emphasis — should be tax reform, not tax cuts.