Liberty Taxed: A Blog on U.S. Tax Policy
Any easy way to share my work at Cato
U.S. federal tax policy is at a critical crossroads. Major components of the tax code—including lower income tax rates, larger child credits, and limits on many deductions—expire at the end of 2025. At the same time, federal budget deficits are projected to remain persistently high, placing new pressures on Congress to raise taxes on individuals and businesses.
I joined the Cato Institute this week and am starting this blog on Substack to help provide context, insight, and policy recommendations as Congress navigates the looming fiscal policy challenges in the coming years. My work will make the case for a smaller, less intrusive government funded by a tax code that maximizes growth by eliminating distorting incentives.
Over the next couple of years, before Congress settles on the next phase of federal tax policy, I will be taking a closer look at the 2017 Tax Cuts and Jobs Act’s successes and failures, where it can be improved, and what to discard. On a similar timeline, the OECD—often in concert with the U.S. Treasury Department—has been pursuing an aggressive agenda to remake the international tax system through a centrally designed international minimum tax and other changes that target large, primarily U.S.-based multinational businesses.
These looming deadlines coincide with systemic federal budget deficits and populist political pressure on the left and right that threaten to reinforce one another, allowing politicians to raise taxes in new and more costly ways. The deficit is the product of a consistent disconnect between what politicians want to promise their constituents and the tax bill they are willing to charge them. Without cleareyed reforms to federal spending, Americans will eventually have to pay higher taxes.
These budgetary pressures will inevitably lead to poorly designed and economically costly new taxes on things such as stock buybacks, wealth, carbon, or financial transactions. However, none of these new sources of revenue can protect policymakers from the reality that there is simply not enough income or wealth held at the top of the income distribution to exempt middle‐income families from having to pay more to support the current federal welfare state. To keep taxes low, we must also cut spending.
You can read more about budget and spending policy at my colleague Romina Boccia’s Substack, The Debt Dispatch.
Lower tax rates, more efficient markets, and a simpler tax system are more attainable with fewer loopholes and subsidies in the tax code. Many provisions of the tax code are the product of political incentives to preference politician’s favorite technology or industry. This has left the tax code riddled with credits, exclusions, and preferential tax rates that fail at their primary goals of social and economic planning. While the 2017 reform made some progress at limiting special privileges, in recent years Congress has returned to using the tax code to subsidize private industry, particularly energy markets.
I plan to use this space to share my most recent writings for Cato in a format that allows new people to subscribe and others to unsubscribe. If you want to sign up, you can do so at Liberty Taxed. I’m excited to join all the excellent folks at Cato in pursuing a free, open, and civil society that is grounded in libertarian principles.