Volcker Commission Report

Today the President's Economic Recovery Advisory Board, chaired by Paul Volcker, released a 126-page report on tax reform options, designed to achieve tax simplification, improved compliance, and corporate tax reform without raising taxes for families that earn less than $250,000 per year.

The Board had no mandate, however, to make recommendations, a la the famous 1984 Treasury "Blue Book" report that led to 1986 tax reform, or the somewhat less successful 2005 Tax Reform Panel under the G.W. Bush Administration.

Given this lack of a mandate, it's no surprise that the report is largely a laundry list of possibilities, stating in fairly general terms the advantages and disadvantages of particular options. E.g., lowering the corporate tax rate would reduce the cost of capital for U.S. companies, but also would lose revenue. Duh.

That comment is perhaps a bit unfair, as in many respects it's a useful compilation - for example, of opportunities to eliminate needless complexity from multiple parallel tax incentives, such as for saving or education, or of the main ways one could change corporate taxation or international taxation, and the main arguments for and against going in each direction.

Still, I imagine that many of the board members and staff people who signed up for this project wish they could have had the opportunity to do more, which they didn't.

I'm not optimistic about major tax reform (good or bad) any time or soon, and although I'd value it if done right I'm not convinced it's the best place to invest one's efforts. I see tax reform as happening (if at all, and I don't think it will) in the context of addressing the fiscal gap by raising taxes and reducing the projected growth rate of spending, via the sort of bipartisan deal that happened several times in the 1980s but does not appear even remotely feasible today.