The Tax Revolution Institute (TRI) was launched not just to reform the tax system, but to revolutionize it.
Since our mission was to promote justice and integrity in the tax system, we believed our work would be entirely political.
It has become increasingly clear, however, that making taxes “flatter,” “fairer,” “lower,” or “simpler” can at best only make things marginally better — and for only as long as the good is not reversed.
Take, for example, the much-praised Tax Reform of 1986 — the “Blueprint” for today’s Brady-Ryan tax reform proposal.
That 1986 reform was a complete rewrite of the U.S. tax code, and passed with bipartisan support. However, far from making the tax code simpler or fairer, the reforms actually made the code more complicated: individual compliance costs went up immediately after it passed, and 30 years later, the code has more than doubled in size again.
In short, our tax code has never been made permanently simpler, flatter, lower, or fairer, for one simple reason: any change that leaves the fundamental structure of our tax system in place — and the people overwhelmingly reliant on it to meet society’s needs — can only ever make very little difference in the long-run.
After more than a year of researching every tax and tax-related proposal, our “a-ha” moment was in realizing that approaching taxes in isolation, as an end in themselves, would necessarily fail, because they are, in fact, a means to another end — the provision of public services.
That has always been the case. From the ancient Sumerians to today, people have used taxes to pay for whatever public services the population considered necessary. Changes to the tax system necessarily affect those public services, and changes to public services tend to affect the tax system.
We don’t approach things in isolation in most other areas of life. If you pay your cable bill, for example, you tend to think about both the inputs (how much will it cost?) and the outputs (how many channels will it deliver and will I be able to watch the shows I like?). Yet, when it comes to the tax system, most people — even reformers — focus on the inputs (tax dollars) in isolation, and almost never on the outputs (public services).
For good or ill, people rely on the public services that taxes fund, and fundamental and sweeping tax reform is doomed to failure if that fact is not addressed.
For that reason, a while ago, TRI started looking at public services and taxes as two sides of one coin, with an extraordinary result.
As many Americans know, public services of acceptable quality are not available to everyone who needs them. This is largely a result of funding many of them through a coercive system. Such a system eliminates accountability by guaranteeing revenue for the provider — government — even when the services fall short in quality or accessibility. The same things that make victims of the taxpayers — inefficiency, waste, complication — make victims of those who need and use the public services: one group don’t receive the services they need while the money of the other group is wasted in their provision.
The discovery that a tax revolution has to be also a public services revolution for the better provides a new way to unite conservatives and liberals around reform, which has been all too elusive because of ideological battle lines.
But how can the needs of society be met if not through the tax system?
In America today, public services are provided in various ways — and most of them do not involve taxation at all: more are provided by charities and companies — or, in other words, by We the People.
Usually, when We the People serve each other through NGOs, companies, and even informal groups, we outperform the government. That’s because these organizations have to deliver results to earn their resources. And since they have to compete with each other for those resources, they have all of the incentives that are absent from any tax system – incentives to make things more convenient, to improve quality, to reduce waste, and many others.
Meanwhile, the need for those who operate in the voluntary sector to earn the money they spend causes them to treat their donors humanely and fairly.
In other words, the simpler, fairer, and lower tax system that delivers the public services that we all need already exists. It’s the voluntary sector — and it’s simply up to us to allow the taxpayer to direct his or her resources to it.
Providing the best public services isn’t just about spending more money doing the same things: it’s about measuring our compassion by the good that we do, and embracing the most effective way to do it.
Right now, in every community in America, there are organizations, groups, and people that already Do Better in providing public services. If we focus on identifying these groups and directing more of our resources to them, instead of arguing over how much government should spend and on what, we can begin to Do even Better.
By going around the tax system, rather than going up against it, we also go around ideology, bringing conservatives, progressives, and libertarians together toward a common goal.
We are focusing on the ends — the wellbeing of the people — by growing the best means that we’re already using to deliver public services, which don’t involve taxation at all, and allowing people to direct their resources to them.
That is why, from today, the Tax Revolution Institute is reincarnated as We Do Better.
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