TAX REFORM DEPENDS ON THE MEDIA

Martin Lobel is Chairman of the Board of Tax Analysts, but the opinions expressed here are his and are not necessarily those of Tax Analysts

Believe it or not, Senator Elizabeth Warren is closer to Milton Friedman's description of a conservative than Speaker Paul Ryan. But you'd never know it because the mainstream media has tagged Warren as a "Progressive" and Ryan as a "Conservative." Milton Friedman, the godfather of free market conservatism, believed the market worked best when the government didn't pick winners and losers. Even a cursory examination of most of Warren's proposals shows that she is proposing just that, to remove tax subsidies for those who can afford to hire lobbyists and attend expensive fund raisers. Ryan, on the other hand, has been proposing tax subsidies or tax cuts for the very rich in the hope that, once digested by them, some of the remains might benefit the rest of us. Ryan, in short, is a plutocrat enabler, not a conservative and the media has an obligation to inform the public about what he is really proposing.

It is an open secret that the best political reward is a tax subsidy because it continues indefinitely, is hidden from the public, and never has to be justified once its on the books. That is why the plutocrats have made our tax code so complicated and irrational. As my old boss, Senator Proxmire once said the more complicated a tax provision is, the less justification there is likely to be for it. Everyone, who isn't benefiting from it, agrees that carried interest, for example, should be taxed as ordinary income. Just as everyone, who isn't benefiting from it, agrees it is irrational to encourage the export of jobs and profits by deferring taxes on so-called foreign income. But they remain as part of our tax code because those who benefit from them are willing to spend whatever it takes to defend them while the ordinary citizen, who may know about them, isn't organized enough to mount a campaign against them or those who support them.

The solution to our complex business tax code is to follow Milton Friedman's lead and eliminate all tax subsidies and lower rates so the free market can work without the government picking winners and losers. That's a true conservative's position. Speaker Ryan's proposals, on the other hand, pick the rich as winners and the rest of us as losers. That's a plutocrat's proposal and should be identified as such. We need to remember that the real function of the government is to protect the public from those who would abuse the system to enhance their power.

If the public understood that Senator Warren is, in truth, a free market conservative and Speaker Ryan is a plutocratic proponent and not a free market conservative, don't you think that it might have an impact? Its time to end "he said" "she said" reporting. Its time for the media to analyze the various tax proposals and reveal them for what they are. Fortunately, Tax Notes provides a forum for experts to do just that. The real question is whether the New York Times and the rest of the general media will translate that information we provide into terms that the public can understand so they have the information they need to make rational decisions.