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Home>UPDATE: Why James Madison is to blame for our bloated tax code

UPDATE: Why James Madison is to blame for our bloated tax code

UPDATE: Why James Madison is to blame for our bloated tax code


By Caroline Baum, MarketWatch

Should lawmakers reward their own voters? Or do what's best for all?

No sooner had the Trump administration released its framework for tax reform (https://www.treasury.gov/press-center/press-releases/Documents/Tax-Framework.pdf), with its suggestion of eliminating "most itemized deductions" except those for mortgage interest and charitable donations, than the battle was joined.

Representatives from high-tax states, such as New York, New Jersey, Connecticut and California, immediately objected to the idea of killing the deduction for state and local taxes (SALT). At least Senate Democratic Minority Leader Chuck Schumer of New York told us that Republicans from those states would object to the idea. (http://thehill.com/homenews/state-watch/352931-states-counties-worry-over-gop-tax-plan)

Eliminating the SALT deduction, one of the 10 largest so-called tax expenditures, would raise about $1.3 trillion of revenue over 10 years, according to the Tax Policy Center (http://www.taxpolicycenter.org/sites/default/files/alfresco/publication-pdfs/2000693-Revisiting-the-State-and-Local-Tax-Deduction.pdf).

It is no secret that the only way to lower tax rates without blowing a hole in the deficit is to eliminate deductions and loopholes, which amounted to a record $1.6 trillion in fiscal 2017 (http://www.crfb.org/blogs/jct-estimates-record-16-trillion-tax-breaks-2017). That is the main reason the last real reform effort to bear fruit was in 1986.

Picking and choosing among the loopholes to cut, cap or keep creates winners and losers. That puts representatives in a tough spot. Do they vote in line with constituents' self-interest? Or do they use their own judgment to vote for what will ultimately be in the nation's best interest? (With House incumbents re-elected about 93% of the time, (https://www.opensecrets.org/overview/reelect.php)just showing up may be more important than how they vote).

In other words, are our elected representatives supposed to act as delegates or trustees? (Trigger warning: Geeky explainer coming.)

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