This last week, Republican David Camp released a tax reform proposal that is one of the most serious ones put forward in a long time. In addition to reducing the number of tax rates and eliminating a raft of loopholes and deductions, the reform also saves middle class families from being ensnared by the Alternative Minimum Tax (AMT). The AMT was a reform put in place decades ago to ensure that rich folks would not be able to escape paying taxes. Today, because of inflation, the AMT traps thousands of middle class families who were never its intended targets. In short the reform lowers tax rates, broadens the tax base, makes the tax code simpler, and apparently raises nearly the same amount of revenue as the current system.

However, the reform itself has received a lukewarm reception on Capitol Hill. While politicians on both sides of the political aisle have largely eschewed the vitriolic, “this is the worst thing I have ever seen” rhetoric that many have come to expect, most of them have given the sort of backhanded, “we will study this proposal”, rhetoric that means that nothing will get done. Meanwhile, the lobbyists for various constituencies have been out in force arguing that the reforms will damage America’s economy, America’s ability to compete globally, etc. etc. Given that any tax system (including this one) has its winners and that those folks may be disadvantaged by a wholesale change in the tax code, resistance is hardly surprising. However, in a political system in which the two parties don’t even seem to be able to agree what color the sky is, it is interesting that neither appears too interested in this reform.

What this indifference may indicate is that the American political system may simply no longer be capable of making common sense reforms that most people (on both sides of the political aisle) realize need to be taken. The current tax system is an economic drag that costs Americans more than $100 billion a year to comply with (in economic terms, this is a dead-weight loss in that the money is spent simply to move money from Point A to Point B without creating any economic wealth). Everyone knows that if one were building a tax system from scratch, one wouldn’t build this complex, byzantine fun house of a system. Anything that simplifies the system and also raises the same revenue is an improvement that large segments of the political class should be able to get behind. The fact that they are apparently not is worrisome.