I’ve always found this topic fascinating. My take, after passively looking at it for years, is that we don’t have anywhere near enough information to make judgments about discrete components of tax policy.
I basically set out why in this post, and in the thread containing it (that I started):
I used to negotiate complex contracts for a living.
One cardinal rule was that you had to keep track of every single puzzle piece (and this was before consumer-level spreadsheets were democratized). Otherwise, many negotiations effectively played out as an expensive version of the car sales’ Four Squares.
Writ extremely large.
You were hammering away on one financial parameter. Meanwhile, they simply adjusted another – often not mentioning it, but burying it into the eventual multi-hundred page contract sent your way for signature.
It took extremely conscientious, eagle-eyed business people and attorneys to catch these all-too-common “mistakes.” The penalty for failure to do so was significant.
Meaning: there are potentially thousands and thousands of tax-related knobs and levers to be manipulated, and we all focus on – because we only have visibility into – an extreme few.
That our system provides no material visibility into True Effective Tax Rates is a profound example of manipulation, but it’s surely not a ‘mistake.’