Back to top

Context From The Talk

John Cochrane On Why a Complicated Tax Code Leads to Negative Outcomes

Lower the Rates and Broaden the Base

"Every economists understands that what you need to do with tax code is lower the rates and broaden the base.

Raise the same amount of money but rather than saying “I’m going to pretend to charge you a 50% tax rate but here is the whole bunch of exclusions, deductions, and so forth so you don’t have to pay it. We will charge a 25% tax rate without all the exclusions and deductions.”

Then, when you think about starting a business, you only say I’m going to keep 75% of the money, not only keep half of the money.

The economy booms and a whole bunch of tax lawyers can go bunch for Uber. That’s not hard to understand and that’s how the economy booms.

The political question is how can we get to a massive simplification that is oriented towards economic growth."