My review of Bruce Bartlett’s latest book, The Benefit and the Burden: Tax Reform — Why We Need It and What It Will Take is on-line. Two paragraphs from early in my review:

Bartlett’s bitterness about his firing has turned into contempt for Republicans and conservatives. For that reason, I wondered how well he would, in his newest book, separate his own upset from his subject matter of taxation. He mainly succeeds. It’s true that in the book he disdainfully identifies certain arguments as conservative; I, a libertarian, found some of those arguments compelling. But when he puts his contempt aside, Bartlett’s analysis is usually first-rate.

Bartlett is a largely self-taught economist — and not in the superficial “Ben Stein” sense of someone who knows a little about economics and calls himself an economist. On taxation, especially, Bartlett truly has mastered both the big picture and the intricate details of each topic he addresses. In the 24 chapters, which average only about ten pages each and contain extensive bibliographies, Bartlett usually hits the nail on the head. On the history of U.S. federal taxation; the relationship between tax rates and tax revenues; the comparison of U.S. taxation with European taxation; tax-reform proposals such as the FairTax and the flat-rate tax; the effects of federal taxation on health care, housing, and state and local government; and the value-added tax, Bartlett’s analysis is illuminating. However, there are two huge problems with the book. First, despite the book’s title, Bartlett only tersely discusses taxation’s benefits. Second, and closely related to the first, Bartlett’s argument for higher taxes comes down to the need for revenue to keep government spending up: He doesn’t really try to justify that spending.

On the Fair Tax:

On the so-called FairTax, Bartlett is brutal, and rightly so. He points out that the 23 percent retail sales tax rate that its advocates envision as a replacement for all current federal taxes is really a 30 percent rate. He also notes that when the Treasury Department, Congress’s Joint Committee on Taxation, and the Brookings Institution have tried to estimate the revenues from such a tax, they find that an even higher tax rate would be needed.

On “starve the beast.”

One common conservative argument that Bartlett does refute effectively is the idea that we should cut taxes to “starve the beast” — that is, constrain the federal government’s ability to spend. He points out that in 1993, President Bill Clinton and a Democratic Congress “raised taxes by about 0.6 percent of GDP.” If the starve-the-beast theory were correct, he notes, government spending would have then risen as a percent of GDP. What actually happened? It fell from 22.1 percent of GDP in 1992 to 18.2 percent in 2000.

And my biggest problem with the book. For a book with “The Benefit” in the title, he doesn’t really make the case that there are big benefits from tax-funded government spending:

Bartlett is justifiably pessimistic about the chances of cutting spending much, and so he wants substantially higher taxes. But he never argues that this higher spending on Social Security and Medicare is justified. Instead, he argues that the political power of seniors will prevent such cuts. In short, his argument for taxing people more is that it’s easier to bully unorganized taxpayers than to cut benefits for seniors, who vote at a higher percentage than any other age group.

But what about default on the debt? San Jose State University economist Jeff Hummel has written that government default would be “a balanced budget amendment with teeth” because it would be hard for the feds to borrow after stiffing their creditors. Bartlett argues that default “would constitute a grossly immoral theft of trillions of dollars from those who loaned money to the federal government in good faith.” Really? It’s worse to default on creditors who took a risk than to forcibly take money from taxpayers who have no choice?

Bartlett predicts that “the debt will be paid.” I think his prediction is wrong. I think that the government will default before 2025 and that we should prepare for it. Meanwhile, let’s not make the spenders’ job easier by passing a vat, which, as Bruce Bartlett himself noted, would be a “revenue machine” for the federal government.