on February 14, 2012
A concise introduction to the current US tax system and the various proposals for tax reform. (Note that this is a public policy book, not a "how to" manual for taxes.) Explanations are rather spare and unelaborated; I had to re-read a few passages to get the gist of what he was saying. The author won't win any prizes for his prose, which is straightforward but dry, yet he writes with authority and is even-handed. He worked for Republican congressmen in the Reagan-Bush I era, but he has no affinity for the current Republican orthodoxy, especially its Tea Party strains. On the whole, I came away feeling much better informed about tax policy and, I admit, frustrated by the political obstacles that stand in the way of meaningful (and needed) reform.
on February 11, 2012
Bruce Bartlett's book "The Benefit and The Burden" is a good book for those of us that want to stay informed, but fall asleep the minute the discussion turns to Federal tax and spend policies. Written by a senior economist in the Reagan and Bush administrations it is surprisingly fair in pointing out where our politics has not been helpful in the debate on federal taxes and spending. Most of the explainations of economics and tax policies are clear and easy to understand without a degree in finance required. As a political independant I would love it if every voter read this before the 2012 election.
Bruce Bartlett's "The Benefit and the Burden" provides an easily readable, credible, and useful overview of American federal taxes and their impact. Bartlett also provides a number of improvement suggestions based on well-thought-out logic rather than useless ideology.
Bartlett begins by pointing out that close to half of all tax filers either pay no federal income tax or get a refund - an obvious built-in incentive for expanding government spending. Then he covers recent macro-level changes, starting with Clinton's raising the top rate from 31% to 39.6% in 1993. Bush I had previously raised it from 28%, his 'No new taxes' pledge notwithstanding. Clinton's rate increase, however, was also accompanied by also increasing the threshold from $86,500 to $250,000. Clinton's actions were followed by rapid economic growth, declining Federal outlays (from 22.1% of GDP to 18.2%), and a 4.7% GDP deficit becoming a 2.4% surplus - all contrary to the dire predictions of opposing Republicans. Then came the Bush II tax cuts and a 3.2% GDP deficit, sluggish economic growth, and The Great Recession.
Many complain that America's taxes are too high (uncompetitive), and headed for European levels. Bartlett shows that neither assertion is based on facts. In 2008 the average total tax burden in OECD nations was 34.8% of GDP, vs. 26.1% in the U.S. Denmark topped the list at 48.2%, and Sweden was close behind at 46.3%. Belgium, Italy, and France were also close, and above the OECD average. Explanations for high European tax rates include 1)greater homogeneity (welfare is seen as helping people like themselves, not 'those others'), extra benefits provide Europeans (all European nations provide health insurance through their government), and a preference for simpler direct government spending, instead of tax credits as in the U.S.
At first glance, the U.S. has the lowest top tax rate (43.2% - includes an estimate for state taxes), vs. Denmark with the highest (62.8%). However, the highest U.S. rate takes effect at the highest multiple of average income (9.6X), vs. Denmark (1.0X). Thus, other OECD nations' taxes are flatter, and less progressive than in the U.S. Foreign nations also rely more on consumption taxes - 29.9% of total taxes in OECD nations, vs. 14.4% in the U.S. Property taxes also contribute a larger U.S. share - 12.1%, compared to 5.4% in the OECD.
Conservatives contend that low taxes bring greater growth. Analysis of real GDP growth/capita from 1979 - 2010 does not bear that out. Ireland had the greatest annual growth rate (3.2%/year), and slightly higher taxes/GDP (28.4%) than the lowest growth state, Italy (26.1% taxes/GDP). Intermediate-growth ranked states ranged from 46.7% (Sweden - #10) to 22% (Spain - #5). European states spend less on defense, more on public infrastructure and transportation, less on income transfers to the elderly.
Nordic nations tax income at lower rates than labor, like the U.S. OECD and other major nations tax environmentally harmful activities more than does the U.S. - 2.2% of average GDP for OECD nations, 0.8% for the U.S.
Bartlett also points out that the U.S. taxes its citizens abroad - the only nation to do so.
Directly comparing taxes from one nation to another is made difficult by varying policies. For example, Medicare Part B premiums ($61 billion in 2010) are shown in our budget as reducing spending, not as revenues. Overall, such practices amount to another 4% of GDP for the U.S. - $600 billion in 2010. We also have tax deductions and credits that equate to spending programs. The Earned Income Tax Credit is an example - it provide about 80% of its benefit via refunds. Child care credits are another example. Bartlett says both have become targets for fraudulent claims.
Concern over tax equity has declined as deficits have grown, and after Cheney's claim that 'Deficits don't matter.'
Net social spending as a share of GDP in 2005: France - 34%, U.K. - 30%, U.S. 27%, Japan and Canada - 23%, Korea - 11%. (These data include mortgage interest and health care deductions.)
Charitable contributions generated a $53 billion revenue loss in 2012, mostly from the upper-income. Another questionable loss - allowing the Heritage and other foundations tax-exempt status.
Unreported income in the U.S. for 2005 is estimated at $1.3 trillion.
on January 24, 2012
In The Benefit and the Burden, Bruce Bartlett takes the reader on a journey from the basics of tax policy to the prospects for the future of tax reform, all from an insider's perspective and as one of our nation's most respected tax policy journalists. This book is useful to anyone who wants to understand tax policy and reform, from the interested citizen to congressional and administration staff to the journalist who needs to understand the issues quickly. Bartlett predicts when reform will likely occur, which I have to agree with, given the case he makes, although I can envision one scenario where reform might come more quickly than we expect. You should buy the book to see how this all might end.
The Benefit and The Burden: Tax Reform Why We Need It and What it Will Take by Bruce Bartlett
"The Benefit and The Burden" is a very solid, no-nonsense book that makes the compelling case for tax reform and what it will take to do so. In an even-handed, non-partisan manner Bruce Bartlett skillfully makes the US Tax System accessible to the masses. Bartlett's background in government economics and having worked on the staffs of Congressmen Ron Paul and Jack Kemp and as deputy assistant secretary for economic policy at the Treasury Department during the George H.W. Bush administration, serves him well to write such a topical and important book. A book about tax reform can be dry and tedious to read at times but Bartlett's lucid and concise prose makes this book a worthwhile read. This educational 288-page book is composed of twenty-four chapters and broken out into the following three parts: Part I. The Basics, Part II. Some Problems, and Part III. The Future.
1. Well-written, and exhaustively-researched book that is accessible to the masses.
2. No-nonsense, lucid and concise prose. The author writes with conviction and expertise.
3. Does a very good job of keeping the chapters short and intelligible.
4. Educational and enlightening book that provides a basic foundation in understanding the US Tax System.
5. Despite Bruce Bartlett's work in Republican administrations, he is even-handed and treats this topic with utmost respect and care. He does not shy away from criticizing any party.
6. In general, the author provides persuasive arguments for his thesis.
7. Good use of charts to illustrate points.
8. The author tell you his biases right up front.
9. A brief history of taxation.
10. Explains the tax system process.
11. Generally does a good job of defining terms and provides simplified examples.
12. Does a very good job of differentiating between conservatives and liberals regarding tax reform.
13. Reality versus perceptions.
14. Some eye-opening facts, "A 2011calculation by the CBO concluded that the Bush tax cuts reduced federal revenues by $2.8 trillion between 2002 and 2011".
15. The factors that contribute to economic growth. The purpose of investments.
16. The basic ways that that income can be taxed.
17. Distinctions between U.S. and foreign tax systems.
18. Tax ideas from other countries. Interesting.
19. The impact of tax credits.
20. Understanding social welfare and how we compare to other countries.
21. The goals of tax reform.
22. Heath care policies.
23. Real estate and tax policies.
24. The impact of state and local taxes, surprisingly educational.
25. Charitable contributions.
26. The special problems of capital gains.
27. The even bigger problem of corporations as it relates to tax policy.
28. The critical goal of tax reform, how to improve the tax collection system. Interesting cases.
29. A look at flat tax and the implications.
30. A brief summary of tax reform proposals.
31. The problem of debt.
32. Value-added tax (VAT), a look at this interesting consumption tax. Arguments for and against it.
33. The future of tax reform.
34. A good summary of what the author would like to see happen and what he feels is the best scenario for tax reform.
35. Tea Party criticism.
36. The author provides extensive reading material and I mean extensive.
1. Despite the best intentions tax reform can be dry and tedious.
2. Let's face it economics is a complex topic and some concepts will go over the heads of many readers.
3. I would have liked an analysis of entitlement programs.
4. A breakout of the budget by categories and an analysis would have been welcomed.
5. A glossary of terms would have added value.
6. A little humor never hurts.
7. In order to keep the book to a manageable level, some topics were sacrificed.
8. No direct links in Kindle.
In summary, this was an educational and informative book. If you are interested in learning the basics of the US Tax System and tax reform this is a good book to start. Bartlett provides a plethora of resources for those who want to sink their teeth further into this topic and the information that he does provide is solid and well grounded. The book can be dry at times and some topics may be beyond the reach of the layperson but in general the author does a commendable job of making the book accessible and keeping the book concise. I learned a lot from this book and the author successfully addresses the main issues of his subject. If you are interested in this topic by all means get this book, I recommend it.
Further suggestions: "Winner-Take-All Politics: How Washington Made the Rich Richer--and Turned Its Back on the Middle Class" by Jacob S. Hacker, "Screwed: The Undeclared War Against the Middle Class - And What We Can Do about It)" by Thom Hartmann, "The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America--and Spawned a Global Crisis" by Michael W. Hudson, "Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else" by David Cay Johnston, and "The Looting of America: How Wall Street's Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It" by Les Leopold.
on February 27, 2012
I rarely write reviews for books I read but I thought this one needed more praise. I got the book after I saw Bartlett on the Daily Show and was impressed by his total lack of craziness. The book is really interesting, rational, and even-handed and totally accessible to a lay reader. It's not like reading the tax code. I'm not sure what I would call the author, politically, and that is extremely refreshing because it's hard to find information on policy that's not skewed by a strong political orientation. Usually you have to read between rhetorical lines and though the author has and gives his own opinions (and thank you, WHY don't we have a VAT??) he talks about a lot of other opinions and ideas, too. I kind of wish this guy ran part of the economy, but I'm awfully glad he wrote this book. It's really a must for anyone with even a glancing interest in the economy.
on September 22, 2012
Very glad to have read this book on the U.S. Tax system and options for tax reform. Bruce Bartlett, the author was an appointee under the Reagan Administration and also worked under George H. Bush (#1)
After giving an overview of basics about the tax system and how our tax system compares with other countries, including a description of U.S. corporation taxes and capital gains taxes and a whole chapter on the ineffective Bush tax cuts, the author makes a strong pitch for a consumption tax such as a Value Added Tax (V.A.T.) like what is used throughout Europe.
Normally this type of tax is considered very regressive, but he feels the pro's outweigh the cons. And I thought he presented a pretty good case. The author explains that there will never be tax reform in this country until Grover Norquist agrees to release those congressmen he holds hostage to a policy of no tax increase no matter what.
Norquist believes "The only time the deficit comes down is when you refuse to raise taxes and you rein in spending." Bartlett presents a powerful contrary example when in 1993, Clinton and the Democratic congress raised taxes by about .6 percent. According to Norquist, this should have led to higher spending but "in fact, spending fell from 22.1 percent of GDP in 1992 to 18.2 percent in Clinton's last year." Also, the author points out the fact that spending rose after the Bush tax cuts in 2001, 2002, 2003, 2004 and 2005 exemplifies another case that disputes the claims of Norquist.
The reader may understand Tax issues better after reading this book but I don't think any reader will feel optimistic about how our Tax system could be improved anytime soon until the radically divisive politics in Washington can be tamed to produce Tax reform in the interests of the country and not just in the interests of Grover Nyquist and his supporter
on November 2, 2012
Everyone understands that taxes are a part of life, but not many people understand the how or the why behind it. This book does a great job of explaining the why, as it currently stands, and how we can change things and move forward. This is a great book that I really enjoyed reading. Now, it is a book about tax law, and can be dry at times. But the author does a great job of keeping you engaged, which makes this a relatively easy read. I am definitely happy I bought and read this book, and I have a much better grasp on tax law, how is affects me, and how I will view this moving forward in my life.
on March 21, 2013
I found Bruce Bartlett's historical and structural analysis of the U.S. income tax to be informative, balanced and fair-minded. Given his impeccable conservative credentials (having worked with Reagan, Jack Kemp and Ron Paul), I was surprised to see him appear on Bill Moyers' PBS program several months ago (where I learned of this book and subsequently purchased it), but that interview suggested his book would be a clear and sober assessment of the prospects for U.S tax reform, and not a reflection of Grover Norquist-like intransigence and rigid ideology, and it is indeed a fair and balanced evaluation. Essentially, Bartlett seems to be pessimistic about the prospects for reducing spending on the government entitlement programs, and appears equally pessimistic about the prospects for meaningful income tax reform (in light of the power, Bartlett maintains, that Norquist's no-tax-increase pledge has on Republican members of Congress). He therefore proposes a consumption tax to replace / supplement the income tax to increase revenue and slow the growth of public debt and thereby maintain the stability of the U.S. economy.
In the author's analysis of various economic issues pertaining to the U.S. income tax, he will appear to side with liberals on some issues, with conservatives on others, and with neither on some other issues, all contributing to the book's "objective" presentation. For liberals, he appears to favor a comprehensive definition of income and a "fair" tax structure that is based on a progressive rate structure; for conservatives, he favors (or appears to favor) increasing the level of capital losses applicable to ordinary income as a spur to entrepreneurship, and indexing capital gains, at least in principle, for inflation, to remove merely inflationary gains from taxable capital gains. There's even some discussion of either eliminating the corporate income tax (which increasingly accounts for a smaller percentage of federal tax revenue) or more closely integrating it into the individual income tax. Bartlett maintains, however, that some tax rate should apply to capital gains as capital gains meet the definition of comprehensive income, and he even discusses the prospects for taxing unrealized capital gains. He reminds us that increasing the capital gains tax rate in 1986 was the required compromise to enlist Democratic support for the substantial reduction in marginal tax rates on ordinary income in the enormously significant TRA of that year. Implied in the TRA of 1986 was an emerging consensus among liberals and conservatives (or at least among many liberal and conservative economists) that a more "optimal" income tax would exhibit lower marginal rates and a broader tax base. Lower marginal rates, and less tax preferences (a broader base) would be a more "efficient" and less-distortionary tax in that there would be less distortion and waste in the private economy from manipulating the tax system. Liberals would still favor a more progressive structure albeit with lower rates, and some conservatives would still favor a "flat" tax, but TRA 1986 showed that compromise was possible. Bartlett's pessimism (he would call it realism) indicates he sees no sign today of any emerging consensus among our two parties on tax reform, and a major (implicit) explanation is the ideological rigidity of today's tea-party and Grover Norquist-dominated Republican party, particularly at primary time.
Of course another impediment to tax reform is the political clout of those groups wishing to preserve tax preferences and who thereby hinder the attempts to broaden the tax base. For example, the author indicates the difficulty it would take to eliminate the mortgage interest deduction in the face of the real estate industry and its Congressional friends. The elimination of the state income tax deduction would be opposed by forces in high-tax states like New York and California. A good many of these tax preferences are targeted toward specific economic sectors and industries. Economists call these tax subsidies "tax expenditures", and it's suggested that the government spending, which is what it amounts to, should be part of the appropriations process, where the annual level can be budgeted and monitored, rather than part of the tax system where it's permanently maintained in the absence of tax law changes. Thus, we're left with Bartlett's advocacy of a value-added (consumption) tax, that would tax, in the words of its proponets, what taxpayers "take from the economy" and not what they "contribute to the economy" (income). Nonetheless, even Bartlett acknowledges that the value-added tax has been politically unpopular in the U.S. (although widely used in advanced economies), is difficult to administer and particularly to implement, and is difficult to incorporate a progressive structure. For students of public finance, this was a rewarding book.
on April 23, 2012
Before I read this book, I read the author's 1980 book, Reaganomics, and wondered whether I had made a mistake to purchase this new one. I was happy to find that Bruce Bartlett has matured greatly as an author. This book was not partisan, but rather had a balanced and informative view that reflected a great deal of maturity. I learned the theoretical advantages of having low marginal tax rates, and of the value added tax. The book also makes the point that tax loopholes (deductions) are just another way for the government to spend money. And usually not the best way! Also, that we can't balance the budget just by cutting spending. But there is no magic bullet--even though the book makes clear what a rational tax policy would look like, it is still very difficult to do politically.