Romney's revelation that he paid a 13.9% effective tax rate on his recent taxes may spur attention to tax reform. Both former TX Rep. Martin Frost and Andrew Sullivan think Obama should highlight tax reform (Bruce Bartlett's suggestions are here) in his State of the Union message tonight. This article reports that it will be a major component of the speech. Frost suggests that he can argue for lower rates, while cutting back on exemptions, and end up with a system that is both more equitable and collects more revenue.
In a related post, Sullivan wonders how and why the capital gains tax rate is so low compared with rates applied to earned income. The how should be interesting to us, and might be the subject of a written assignment some time in the near future. What political forces were able to drive down the capital gains rate at the expense of other tax rates?
Neat symbolism: Obama supports the "Buffet Rule" which simply states that the tax code should not force Warren Buffett's secretary should not have to pay a higher rate than her boss. Buffett's secretary will be at the speech tonight.
