- - Tuesday, September 29, 2015

ANALYSIS/OPINION:

The “issues” in a political campaign are often called by easily bored camp followers as “DBI,” something dull but important. Many voters, addicted to watching the world pass by on the little video screen, sometimes think “issues” are best ignored. Better entertainment may be at hand. Paying attention is hard work and it’s a clich that “nobody’s talking about the issues.” So now’s the time to get serious. Several Republican candidates have displayed their plans for a comprehensive overhaul of the tax code, designed to broaden the tax base and stimulate the economy. This week Donald Trump followed Marco Rubio, Rand Paul and Jeb Bush as a man with a plan.

The Trump plan differs in key places from some of the others. He says it would eliminate the income tax for millions of households, lower the taxes on businesses to 15 percent and change how taxes are figured on the earnings of many companies doing business overseas. No individual would pay more than 25 percent of his income, down from 39.6 percent in the present tax code. The Jeb Bush tax reform, for example, would reduce the individual rate to 28 percent.

“My plan will bring sanity, common sense and simplification to our country’s catastrophic tax code,” Mr. Trump told an interviewer after the introduction of his plan. “It will create jobs and incentives of all kinds while simultaneously growing the economy.” The early criticism from economists is that it’s not possible to do all the good things without increasing the federal debt.

We can quibble with each of the plans, but they all address the need, as John F. Kennedy said in his presidential campaign of more than a half-century ago, to “get the economy moving again.”

The prospective Democratic candidates for 2016, on the other hand, save their rhetoric to trash the current system as unfair to the poor, and suggest simply raising taxes on the rich to prevent the one-percenters from passing their wealth on to the next generation. They promise nirvana without going into the details where the devil is said to reside. The Republicans generally favor policies to make the economy grow, to enable the economy to bake a bigger pie, and Hillary Clinton and Bernie Sanders ponder how best to slice and dice the pie already at hand.

In a new Brookings Institution study, Peter Orszag, director of the Office of Management and Budget in the early Obama administration and former head of the Congressional Budget Office, concludes that soaking the rich by raising taxes on top earners would have little effect on what the liberals call “income inequality,” even if every dollar raised was simply handed over to low-income Americans.

The Brookings study, coauthored by Mr. Orszag with William Gale and Melissa Kearney, posits the impact of raising the rate on top earners to 50 percent, and the results are disappointing. The authors conclude that “the resulting effects on overall income inequality are exceedingly modest. That such a sizable increase in top income tax rates leads to such a limited reduction in income inequality speaks to the limitations of this particular approach to addressing the broader challenge.”

When “the other Clinton” ran for president in the previous century, someone posted a sign in the campaign headquarters in Little Rock to remind everyone that “It’s the economy, stupid,” and the message was never to forget it. A president has to deal with many other challenges, of course, but any president who doesn’t have a plan about getting the economy moving had better get one. The Republican candidates are beginning to do that, and everyone should listen.


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