FL - Guidance issued on catastrophic event property damage
Florida provides guidance on catastrophic event property damage for property tax purposes. Topics discussed include the payment of property taxes, […]Read More
Mark Mazur, former assistant secretary for Tax Policy U.S. at the Department of the Treasury, told members of the House Budget Committee that the current tax code does not meet four key ideals.
During a June 22, 2023, House Budget Committee hearing, Mazur described four main criteria that should be used to evaluate the tax code: its adequacy for generating revenue; the code’s minimization of distortions; whether its equitable; and its simplicity.
“Those are the ideals,” Mazur testified. “Our system falls short on all four dimensions.”
In terms of adequacy, Mazur noted that the last time the federal budget was balanced, the revenue raised was about 20 percent of gross domestic product.
“Since then, as a country we have decided to increase spending on things like national defense, and demographically, we have way more retirees than we used to have who claim benefits from Social Security, Medicare, Medicaid, and so on,” he said. “And so, if we’re serious about balancing the budget, we’d be looking at something above 20 percent of GDP, not below.”
Mazur added that in 2022, revenues reached “a one-time apparition” of 19.6 percent of GDP. “That would be a good start if we were able to maintain that.”
To emphasize the point that the adequacy of revenue generation was off, he used himself as an example, noting that comparing 1988 to 2018, while his inflation-adjusted income rose nearly 50 percent, his effective tax rate decreased by about 2 percentage points to 19 percent.
“So, I was paying less to the federal government for the services that I was getting, which are roughly the same level of services 30 years later, even though my income was substantially higher,” Mazur testified, adding that it “doesn’t seem like a strategy for getting the budget balanced.”
In terms of making the tax code more equitable, Mazur suggested that Congress could “rebalance the tax code so that higher income people pay a larger share of their income taxes. And that could be through payroll taxes for Social Security and Medicare, or through income taxes. You could look at the preferential rate on capital gains and dividends. There was a lower rate put on dividends that was supposed to account for the 35 percent corporate tax rate. It did not get changed when the corporate tax rate went to 21 percent.”
Mazur also took a shot at Child Tax Credits, which he noted can fill in the income gaps for families with children, but is no help to those without, but who may still need the assistance.
“I’d be much more in favor of increasing the minimum wage than increasing the Child Tax Credit by a similar amount,” he testified.
By Gregory Twachtman, Washington News Editor
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