Thursday, September 30, 2010

Pointed questions--for bankers AND tax policymakers

Elizabeth Warren, President Obama's choice to organize the new Bureau of Consumer Protection met with 400 bankers last night. She made a clear statement about the standards she expects from them:

"Regulators can make more pronouncements from on high, identifying suspicious practices in the various markets and banning them. Or regulators can layer on more disclosure requirements," Warren said in her remarks. "But neither restores customer trust."

Rather, she said, "Let's measure our success with simple questions" -- Can customers understand a product? Do they know the risks? Can they easily figure out what it really costs?

The speech contained an understated but unmistakable challenge to those in the room to change their ways. Glimpses of the feisty Warren remained, such as when she noted that "too many Americans see dealing with banks like handling snakes - do it long enough and you'll get bit."

She ought to ask those who write our tax laws exactly the same questions:

Can customers (taxpayers) understand a product (our tax laws)? Do they know the risks? Can they easily figure out what it really costs?

Plumbers and law professors ought to be able to understand the terms of the tax policies our lawmakers are debating.

The evidence is clear that they do not, because the standard of clear and straightforward use of language that Elizabeth Warren wants to demand from the banking industry is sorely lacking in our tax code.

The financial documents produced by the banking industry, opaque and byzantine as they currently may be, are still a model of transparency compared to our convoluted tax code.

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