New at Reason: Tax Policy Manipulation

I have a new piece published this week here at looking at the arguments behind the president’s and the GOP’s tax ideas:

In the current debate over whether or not to extend the Bush-era tax policies there are three key questions. Would letting the tax law expire would be a return to normal or a tax hike? How would the policies impact the economy and recovery? And what’s the purpose behind letting them expire or cutting taxes?

To start, people and businesses have been working with the current tax structure when writing their yearly budgets for nearly a decade. Business plans are designed to function best in the current paradigm. So, at the very least, allowing the current tax laws to expire will feel like a tax hike to many.

A tax increase, real or perceived, would have a negative impact on economic growth. From unemployment to housing to Gross Domestic Product growth, nearly every economic indicator has been trending downward in the recent months, has flatlined, or has a dismal outlook for 2011.

The White House wants to bump up the tax rate in order to help pay down the deficit, believing an increase will create a net increase in revenues. Conservatives argue that increasing taxes would derail the recovery by slowing economic growth and disincentivizing businesses. But both sides want to use taxes as a means of generating a recovery—which shouldn’t be the purpose of tax policy.

Here is the rest of breakdown of positives and negatives the various tax policy ideas floating around.

Anthony Randazzo

Anthony Randazzo is director of economic research for Reason Foundation, a nonprofit think tank advancing free minds and free markets. His research portfolio is regularly evolving, and he maintains a wide interest in economic policy at both a domestic and international level.

Randazzo is also managing director of the Pension Integrity Project, which provides technical assistance to public sector retirement system stakeholders who are seeking to prevent pension plan insolvency. His research focus on the national public sector pension crisis has a dual focus of identifying the systemic factors that cause public officials to underfund pension obligations as well as studying the processes by which meaningful pension reform can be accomplished. Within the Project he leads the analytics team that develops independent, third party actuarial analysis to stakeholders considering changes to public sector retirement systems.

In addition, Randazzo writes about the moral foundations of economic theory, and is currently developing research on the ways that the moral intuitions of economists influence their substantive findings on topics like income inequality, immigration, or labor policy.

Randazzo's work has been featured in The Wall Street Journal, Forbes, Barron's, Bloomberg View, The Washington Times, The Detroit News, Chicago Sun-Times, Orange-County Register, RealClearMarkets, Reason magazine and various other online and print publications.

During his tenure at Reason he has published substantive research on housing finance, financial services regulation, and various other aspects of economic policy at the federal level. And he has written regularly on labor economics, tax policy, privatization, and Turkish-U.S. political and economic issues.

Randazzo has also testified before numerous state and local legislative bodies on pension policy matters, as well as before the House Financial Services Committee on topics related to housing policy and government-sponsored enterprises.

He holds a multidisciplinary M.A. in behavioral political economy from New York University.

Follow Anthony Randazzo on Twitter @anthonyrandazzo