Tax Policy

(originally published at Fox & Hounds Daily)
You couldn't come up with a better time than right now if you wanted to remake the California tax system.

It won't be easy, but many of the stars are aligned. And no one has more incentive to make such a change happen now than Gov. Jerry Brown.

While the details of the debt-ceiling deal remain fuzzy, this much is clear: Barack Obama may be president, but the Tea Party is now running Washington. How did this happen? Simple: This is what American politics looks like when there's no left-wing movement and no war.

Right now our David Rothstein is part of a House Ways and Means Subcommittee on Oversight hearing on the new IRS rules regarding paid tax preparers.

Chairman Boustany, Ranking Member Lewis, and Members of the Subcommittee, thank you for giving me the opportunity to testify on behalf of Policy Matters Ohio, the New America Foundation, and the National Community Tax Coalition. My research is primarily focused on the financial status and socioeconomic challenges experienced by the millions of low-and moderate-income tax filers in the United States, and my comments reflect the perspective of those who provide free tax assistance to these individuals through the Volunteer Income Tax Assistance (VITA) Program.

The economic environment in America today is more dire than most of us have ever known. We are in the midst of an unemployment emergency, in essence a jobless recovery: notwithstanding recent marginal upticks in official U.S. jobs numbers, there will be no fundamental improvement in the unemployment picture unless major new national economic strategy initiatives are taken. Who will step up to drive them forward?

The debt ceiling deadline is days away, but something unusual is happening in Congress. Rather than playing the short game, and following the old tradition of kicking important budget decisions down the road, dozens of senators are building the case to think long. Even as they plan a vote to avoid default, they have a rare opportunity to accompany a debt ceiling increase with a plan to bring our fiscal situation under control. They should take that opportunity.

If the debt-ceiling negotiations reveal anything about America in 2011, it is this: we live in an age of political amnesia. From the day the Twin Towers fell until the day Barack Obama was elected president, Washington Republicans did virtually everything in their power to increase the deficit.

Maybe the cynics are right. Maybe it will prove too heavy a lift to use the occasion of the debt ceiling increase to put in place a large, specific budget fix to reduce our massive deficits.

Enough policymakers now seem to buy the importance of lifting the debt ceiling, and it appears we will find a way to do so in time, thereby avoiding an (inexcusable) default.

Reading about the debt-reduction talks is painful. It's painful because in analyzing them, the media frequently fall back on storylines that just aren't true.

So President Obama has reportedly given congressional leaders a menu of options in the debt ceiling talks: a small, temporary debt deal; a medium-sized "down payment"; or the big "grand bargain."

No question -- and it sounds like most of lawmakers agreed -- the motto on the debt ceiling deal must be: Go big or go home.

Well, don't go home; keep working. But by all means, go big.