Political Expediency Beats Good Policy in Obama Tax Plan

Presidents often trade imperfect policy for political expediency, and the tax proposals in President Barack Obama’s fiscal 2013 budget are a good example. In stitching new bits and pieces to an already Frankenstein-like income-tax code, the budget is a showcase for muddled aims producing bad policy, especially when it comes to taxing investment income.

Beyond higher levies on millionaires, the president’s plan makes only modest progress toward goals we applaud, including raising more money and making the tax system fairer. The president does too little to broaden the tax base, which is the best way to combine the goals of greater simplicity, more revenue and less tax avoidance. As Obama prepares to offer a corporate-tax reform measure, he should keep these first principles in mind.