Though tax policy isn’t often on the minds of most students, economists that previously served in the administrations of former United States presidents urged awareness of financial affairs at an event at the Ross School of Business Tuesday.
Students, professors and Ann Arbor residents gathered in Blau Auditorium to hear four prominent economists discuss the tax policies of President Barack Obama and Republican presidential nominee Mitt Romney and how different courses of action could impact the country.
Mary Ceccanese — a research process coordinator at the Business School’s Office of Tax Policy Research who helped coordinate the forum — said the event was inspired by a similar meeting held during the 2000 election at the University that was designed to provide a clearer understanding of each candidate’s tax policies.
“People need to hear what’s not being said on both sides of the aisle,” Ceccanese said.
Economists Bruce Bartlett, Leonard Burman and Kevin Hassett were featured panelists at the event, while University Economics Prof. Joel Slemrod hosted the discussion. All four have extensive backgrounds in economic and tax policies from working for Democratic and Republican presidential campaigns.
Throughout the event, topics ranged from the tax policies of individual candidates to the effect of the current political climate on the country’s fiscal challenges.
Slemrod, who worked for the Council of Economic Advisers during the Reagan administration, began the discussion by reminding the audience of America’s long history with tax policy debates, noting that even the American Revolution started as a tax revolt.
He added that a major difference between the budget plans of the candidates is Romney’s focus on cutting entitlements and Obama’s push toward raising taxes, two very different approaches to deficit reduction.
Burman, who served as deputy secretary for tax analysis in the Clinton administration, said Obama’s budget plan was too complicated and could have better accomplished its objectives in more efficient ways.
He specifically noted that the Buffett Rule — which mandates that high-income earners pay an income tax rate of at least 30 percent — risks creating another Alternative Minimum Tax, which was originally intended to tax the wealthy, but ended up taxing the middle class.
Hassett, a senior economic adviser to Sen. John McCain (R — Ariz.) during his 2008 presidential campaign, said in an interview before the event that Obama isn’t prepared to solve budgetary problems.
“Obama doesn’t really have a plan at all,” Hassett said.
A major critique of Romney’s plan from all three speakers was that he hasn’t actually provided a detailed plan.
Burman said he feared that Romney’s plan could lead to a repeat of challenges under the Bush administration, where the former president alleged that tax cuts were accompanied by failed promises to cut spending. He said ultimately this led to large increases in the deficit and a financial crisis when the expected economic boom didn’t occur.
Despite promises by candidates to alter the tax code to fix the economy, Bartlett — who formerly served as deputy assistant secretary for economic policy during the Reagan and Bush administrations — said past reforms had little effect on the economy-at-large
“People make extravagant claims about what tax reforms can do,” Bartlett said.
When discussing the nation’s current economic woes, Hassett said the combination of a high deficit and large future financial obligations has created a problematic situation.
“Deficits are large and the promises we made are even larger,” Hassett said.
Burman said the private sector could play a substantial role in revitalizing the economy, but is inhibited by hesitancy to begin spending again due to an uncertain economic climate.
While tax codes and policies may seem like daunting topics, the speakers agreed it is important for students to educate themselves on the matter, so they can be informed voters and citizens.
In an interview after the event, Burman said if fiscal policy isn’t changed, students will end up bearing the burden, so it’s critical that they inform themselves on the issue.