Last week, Americans for Tax Reform and a broad range of center-right organizations sent a letter to key policymakers in Congress and the executive branch urging passage of legislation to simplify and reduce the burden imposed by the federal tax code. The Mackinac Center was one of the signatories.

Many economists say that a virtuous tax system rests on four pillars: simplicity, efficiency, revenue sufficiency and fairness. The current federal tax code for both individuals and businesses fails on all four points.

The tax code is hard to understand and navigate, with mountains of complex rules, requirements and exceptions that impose massive compliance costs on families and businesses. Successive generations of politicians have used the tax code to deliver selective benefits to favored special interests in the form of narrowly defined credits and exemptions. Among other bad effects, this means the rest of us must pay more to make up the difference.

To paraphrase the president who signed the last genuine tax reform measure in 1986, the current tax code permits the employees of the Internal Revenue Service to treat the money we earn as if it belongs to them first. The code eschews simplicity and fairness, and is instead skewed toward complexity and favoritism.

The nation was promised tax reform by Donald Trump when he was just a candidate. On September 25, a comprehensive tax reform plan will be announced. It is expected to reduce the corporate income tax rate to 15 or 20 percent from its current rate of 38.9 percent and double the current personal exemption for individuals.

These reforms are long overdue and could have profound consequences for economic growth and prosperity in Michigan, America and ultimately the world.

To hear more about what the tax reform bill is likely to contain, watch Grover Norquist’s speech “The New Fight for the Right” at the Mackinac Center Issues and Ideas Luncheon of September 7.

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