Tuesday, July 10, 2012

An Open Letter to Mitt Romney About Taxes

Dear Mitt,

You don't need The Naked Dollar to tell you that our current tax code, a Frankenstein monster of unimaginable complexity and perverse incentives, is a huge part of what's wrong with our economy. You acknowledge as much on your website. We all know the code is a monster that can no longer be tweaked - it must be destroyed.

But your solutions (which are there, if you click enough things) are not revolutionary. They can barely be called evolutionary. You leave the monster in place.

Right now, you are essentially avoiding the issue on the campaign trail. I suspect this is because you think you will leave yourself exposed to class warfare arguments. You believe you can run a disciplined, close-to-the-vest campaign and win. You probably can. With a wink-and-a-nod you assure your supporters that you'll solve the big problems after you dispense with the election.

I have a problem with this, because the goal is not so much to get you elected as it is to fix the country. We may not get another chance. For a president to pull off a big, structural change in something like the tax code, without saying up front it's what he wants to do, is highly problematic. On the other hand, if you say it, it's a mandate.

What's frustrating to me is that the tax issue is not something you need to hide from. In fact, embracing it will help you get elected. Follow me here:

  • The tax code is the single biggest source of (legal) political corruption there is. Politicians sell exemptions to the code in exchange for contributions. The more complex the code, the easier it is for pols to pull this off. Our current code is unmatched in its complexity, and therefore its corruption.
  • Most of those buying code exemptions are big corporations. There is an expression for this: crony capitalism.
  • All true conservatives hate crony capitalism, because there's nothing capitalist or conservative about it. It's legalized cheating that distorts free markets.
  • More importantly, the left hates it too. Big corporations buying favors? This is one of the things the Occupy types are marching in the streets about.
  • So, rail against the tax code as the source of crony capitalism, as something that favors big, connected corporations over the little guy (all true).
  • Make the point that the only way to heal the code is to scrap it and start over with something new, the simpler the better (even a little complexity will leave it open to corrupting influences later).
  • Also point out that by doing this, you can dramatically reduce the size and scope of the IRS, nicely contrasting you with Obama's plans to enlarge it.
  • Lastly, find a company, perhaps in Nancy Pelosi's district, that got a tax break that no one else got. Link it to a series of contributions. Make it the poster child for tax-code related corruption.

These arguments will resonate with every point on the political spectrum. They will firmly plant you on the side of the little guy and small biz, helping offset your image as a Bain Capital, big time Fortune 500 type. Best of all, they are all true.

Time to step up, Mitt.


The Naked Dollar

1 comment:

  1. Romney would do well to embrace replacing the Corporate Income Tax by a Value Added Tax. The VAT was developed for world trade and all our trading partners use it to our competitive disadvantage. The VAT (government tax burden) is subtracted from exports and added to imports, which levels the playing field. Not a total antidote to outsourcing, but a step in the right direction. See: http://vatinfo.org/2012/01/the-smart-tax-proposal/