When Washington confronts our crushing debt burden – and we will confront it either by choice or crisis – the solution will follow a path that is largely accepted among policymakers on both sides. Some form of comprehensive tax reform that lowers rates and broadens the tax base will accompany or precede fundamental entitlement reform. Put another way, tax reform is the policy and political bridge that will help us achieve a grand bargain and avert a European-style debt crisis.
As a matter of policy, tax reform is critical because it will help us create real growth and jobs like no other reform. Tax reform won’t just give us a tune up; it can help rebuild our economic engine for the 21st century. We waste more than $350 billion on tax compliance every year according to the Tax Foundation while another $2 trillion is sitting on the sidelines, due in part to uncertainty in the code. The last time Congress reformed the tax code was 26 years ago, which preceded the longest peacetime economic expansion in our history. Our country desperately needs that kind of growth – and revenue boost – again to help us avoid the collapse of our safety net.