Real Policy isn't Done Through Taxes

Written by Eli Lehrer on Wednesday November 2, 2011

David Frum is right to attack the growing Republican orthodoxy that "nothing is wrong with this country that cannot be solved by abolishing the capital gains tax." He should take the argument a little further: a fixation on taxes above everything else--regulatory policy and excellence in provision of necessary government services in particular--has done enormous damage to the conservative cause.

Taxes, after all, are only part of what the government does. While it's possible to achieve some goals other than revenue collection through the tax code (encouraging retirement savings and helping the working poor take home more money are both far better achieved through the tax code than any other means devised so far) most things that government does simply don't relate to tax policy at all.

Federal taxes have almost never consumed more than 20 percent of GDP and basically, are paid only by those adults in the labor force. Federal regulations and spending programs, on the other hand, impact just about everyone. I personally would like to see capital gains taxes reduced or eliminated. But it certainly isn't a cure all. No part of tax policy ever could be.