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11 IRET Congressional Advisory 1 (1992)

handle is hein.taxfoundation/iretcgadv0010 and id is 1 raw text is: IRET October 1, 1992 No. 11 H.R. 11 - R.I.P., REALLY! H.R. 11 (The Revenue Act of 1992) illustrates the violence that so-called revenue neutrality does to tax policy. Top priority in tax policy should go to removing tax barriers to economic progress. The revenue raising provisions in both the House and Senate versions of H.R. 11 move in precisely the opposite direction. The House and Senate versions of H.R. 11 (The Revenue Act of 1992) differ in their revenue raising provisions. The Senate bill is roughly twice as large, in terms of both its revenue The only coke raising and revenue losing th- features. The Joint Committee ghther On Taxation (JCT) scores the they seem ei tax hikes in the Senate version hidden from at $34 billion for the five year technical natit period 1993-1997 versus $17 politically vuJ billion for the House version taxpayes ...If over the same period. Senate bill w take-it-or-leav, The only coherent theme better to leave running through the two versions' revenue raisers is that they seem either to be largely hidden from voters by their technical nature or else to target politically vulnerable groups of taxpayers. They would not simplify the tax code; most of them would add to its complexity. They would not lessen inefficiency-causing tax biases against various activities but, on the contrary, generally raise them. Instead of being in accord with principles of sound taxation, most of the proposed tax hikes seem arbitrary and capricious and would violate good tax principles. The proposed increases range across the tax code with no discernable connection to each other. The Senate bill has more objectionable provisions than the House plan because it is larger. Why Tax Hikes Do Not Belong In H.R. 11 The Conference Committee appointed to reconcile the two versions of H.R. 11 will need to examine a long list of provisions. Although the legislation is often passed off as an urban aid tax bill, it is actually wide ranging and large; the overwhelming majority of H.R. 11 has nothing to do with urban aid. Many of the provisions under consideration are revenue raisers. The Conference Committee should reject most of them. In general, the revenue raisers in both versions of H.R. 11 are complicated and arbitrary. Many against saving r-ent theme runmning vlenue raiser-s is that ther- to be lar-gely voter~s by their- ire or, else to target ner-able gr-oups of either- the House or- er-e pr-esented on a e-it basis, it mnight be it. of them would worsen tax biases and investment. Some would discourage work effort. They - are, in short, at odds with improving the tax system. The revenue neutrality argument for the tax hikes is that they are needed to counterbalance H.R. ll's tax reductions and spending increases. It makes little sense, however, for the government to enact a beneficial set of tax changes with one hand and then hit m taxpayers with a harmful collection of changes with the other hand. If either the House or Senate bill were presented on a take-it-or-leave-it basis, it might be better to leave it. It is not clear that present law is inferior to either package of proposed changes, and retaining present law avoids the confusion and other disruptions that occur when the tax code is altered. Institute for Research on the Economics of Taxation IRET is a non-profit, tax exempt 501(c)(3) economic policy research and educational organization devoted to inorming the public about policies that will promote economic growth and efficient operation of the free market economy. 1730 K Street, N., Suite 910, Washington, D.C. 20006 Voice 202-347-9570 * Fax 202-463-6199 0 Internet www. ret.org

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