« Dumping Dick Cheney? | The RCP Blog Home Page | Why China Won't Become Super »

More on Tax Reform

The Club for Growth's Andy Roth penned a pithy column called "Tax Competition" that echoes the thoughts I recently expressed in my blog "Voting with Their Feet". Here it is:

"Do liberals believe in tax competition? Do they recognize that it exists? This is a serious question and I honestly don’t know the answer. They probably believe on some level that it does exist, but since it doesn’t mesh well with their overall philosophy, they choose to ignore it.

I bring this up because I came across this article about how the Swiss are cutting tax rates to compete against Ireland and the EU.

Consider an example: Two towns border each other. Town A has a sales tax rate of 8.125%, while Town B has a sales tax rate of 5%. Is it not common sense to assume that people will spend more money in Town B, and as a result, Town B will collect more in tax revenue? (this really happened)

Fact is, liberals need to admit that incentives really do matter. People prefer to be taxed less than to be taxed more. They don’t overpay their tax returns (not even John Kerry does that) and businesses like areas where taxes are low, even if that means going overseas.

We can move mountains if liberals concede that fact. Let’s agree to simplify the tax code and slash rates, or even abolish the income tax and move to a low national sales tax.

Once we agree on that, then we can debate the old argument about tax fairness until everyone is blue in the face. But, the point is that everyone needs to recognize that the Laffer Curve is a mathematical verity. Until then, liberals will continue to look like ostriches with their heads buried in the sand."