Jack Kemp shares in his column at Townhall.com about the Institute for Policy Innovation's benchmark for sound tax policy, in a paper titled A Framework for Tax Reform, written by Stephen J. Entin and Larry A. Hunter.

Basically, the paper shares three principles of a sound tax system:

• Economic Efficiency: inflict as little damage as possible on the economy.
• Technical Efficiency: impose the smallest possible compliance and preparation burdens, as well as minimize administrative and enforcement costs.
• Political Efficiency: distorting a little as possible voters' choices regarding the amount and composition of public goods and services. Further, the ability to shift the tax burden from one group (those in power) to another group (those not in power) should not be possible. "At a minimum, political efficiency requires the adoption of super-majority voting rules to apply to changing the definition of income subject to taxation or to alter the rate(s) at which that income is taxed."

The paper also shares the four attributes of a sound tax system:

• Neutrality: measuring capability correctly, and levying taxes evenly.
• Visibility: transparent to the taxpayers, so it is clear how much the government costs and who is paying for it.
• Fairness: equal treatment under the law.
• Simplicity: not complicated beyond what is necessary.

While neither the IPI document nor Kemp use this to endorse the FairTax, there are no other tax proposals anywhere that fit these definitions. Only the FairTax has economic, technical, and political efficiency. Only the FairTax has neutrality (by shifting the tax base to consumption), visibility (everyone will know the tax rate), fairness, and simplicity.

The reason Kemp brings this IPI document to light is because the president's Tax Advisory Panel chose to hear from Stephen Entin in their first session. This meeting is being held today, and Entin will most likely be presenting these principles of a sound tax policy. If the panel finds that these principles and attributes are a good standard of measure for alternative tax proposals, they will find that the FairTax satisfies all of them.

Labels: politics