Tax-cuts with a purpose. The United States should not squander its opportunity to create a better tax code.

As the size of Americas pojected bud et-surplus baloons! a stran e new summer fe"er is spreadin around #ashin ton$ tax-cut syndrome. %epublicans ha"e lon been afflicted with the condition. &ow increasin numbers of 'emocrats are showin similar symptoms. Top of the politicians hit lists are the estate tax! and the (marria e-tax penalty) * the quir+ in the tax code wich implies that some couples with two incomes pay more tax when they et married than if they were sin le. The ,ouse of the %epresentati"es has already "oted to repeal the estate tax on inherited property. As The -conomist went to press! the Senate was poised either to follow suit or at least radically to reduce its scope. A reduction in the marria e-tax penalty is also li+ely. .n both cases the lawma+ers are ma+in a mista+e. &ot because to cut taxes is intrinsically a bad idea. /oliticians should always see+ to lower taxes whene"er prudently possible. 0ut the problem with these tax-cuts is that they are moti"ated by short-term political opportunism. #hat America needs is a lon er-term strate y for tax reform. The administrations estimate for the cumulati"e ten-year bud et surplus! excludin social security! was recently raised to 12.3 trillion 4two-and-a-half times bi er than the estimate e"en fi"e months a o.5 That ma+es it increasin ly difficult to ar ue that any tal+ of tax-cuts is insanely profli ate. 0ut prudence still su est caution. -"en a small chan e in the economic assumptions underpinnin the surplus projections can ma+e a bi difference. And the spendin forecasts are undoubtedly too low. 6i"en these uncertainties! 7on ress should be leery of repealin taxes willy-nilly. .nstead it should be thin+in about how to impro"e tax policy. 0y any measure! Americas tax code is notoriously complicated and riddled with exemptions8 these are a boon to accountants and a ni htmare to many taxpayers. Tax reform in the mid-239:s brou ht some relief. 0ut since then! the 7linton administrations determination to use the tax code as a tool of social policy throu h innumerable tar eted tax credits has worsened the complexity. Simplicity! efficiency and fariness are the traditional criteria a ainst wich tax codes should be jud ed. ;or some a system that focuses taxation on consumption ma+es the most sense. ;or others a flatter system of income tax! with fewer exemptions! is preferable. #athe"er path is chosen! the important tas+ now is to de"elop a strate y a ainst wich indi"idual tax-cut proposals can be tested * and a few peoples idea of serious reform would be in with the current proposals! wich to ether could eat up a fifth of the projected bud et surplus o"er the next decade 4and much more thereafter5. Thin+ first! cut later. /erhaps the bi est objection to his approach is the notion that the United States will ne"er be able to a ree on how to reform its tax policy. Therefore! it is probably better to rab any tax-cuts that you can. This too is wron - and not just because hu e tax-cuts till loo+ fiscally imprudent. After all! social-security reform! another supposed impossibility! has now become part of the presidential campai n. The presidential race

would also be a ood place to re+indle the debate about tax reform. 6eor e #. 0ushs bi across-the-board tax-cuts are already bein measured a ainst Al 6ores pint-sized! poll-tested and tar eted alternati"es. 0ut until the focus shifts from cuts to reform! 7on ress would be better off usin the surplus principally to pay down debt.