Everyone agrees that our country's tax policies have many flaws, so it is easy to feel discouraged, but it is worth reflecting on some of its successes as well.
There is general agreement, by both conservative and liberal policy analysts, that the Earned Income Tax Credit has been a great improvement over the traditional AFDC welfare system, because it subsidizes and encourages work incentives that enable many people to take jobs, leave welfare rolls, and rise above the poverty level.
Our tax policies have also enabled our country to raise the funds for many programs widely acknowledged to be successful by most Americans: the funding of the war effort in World War II, the GI Bill and the Marshall Plan afterwards, and the Interstate Highway System in the 1950s. Up to this point, tax policies have also enabled the government to fund Social Security and Medicare, both public programs that enjoy a great deal of popular support, though they pose financial sustainability problems in the future due to an aging population and the growth of health care technologies.
Other tax policies are more controversial: some, but not all, analysts give credit to the Kennedy-Johnson and Reagan tax cuts for stimulating the economy.
Whatever the past accomplishments of tax policy, there is much room for thoughtful improvement in tax design. Taxes are already very complicated. Many analysts have argued that we are asking our tax policies to accomplish so many different objectives that it blunts the effectiveness of the tax policies, because people can't understand the incentives it is designed to provide.
These are some of the policy questions we will consider over this winter term in the course of helping Schenectady low and moderate income taxpayers at our VITA site.