In the 1980s I often said that if you tax something you get less of it, if you subsidize something you get more of it. This basic premise is at the heart of incentive-based economics. In the 1980s we had a tax system that disproportionately taxed work, savings and investment and subsidized leisure, welfare and unemployment. The incentives were so skewed that we were retarding economic growth and endangering our future standard of living. Unfortunately, with the exception of the last four years, we have been steadily exacerbating an ever-widening tax wedge between workers and incentives to work, save and invest.
The president's bipartisan Advisory Panel on Tax Reform meets for the first time this week. It is chaired by former Sens. Connie Mack, R-Fla., and John Breaux, D-La. The president could not have picked two better chairmen.
At their first meeting, the panel has chosen to hear from a diverse and distinguished group of tax specialists, one of whom is especially noteworthy, Stephen Entin, president of the Institute for Research on the Economics of Taxation. Entin brings to the panel a valuable perspective on tax reform. He served as deputy assistant secretary in the Reagan Treasury Department under Under Secretary Norman Ture, one of the great tax theorists of the second half of the 20th century.
After leaving Treasury, Ture founded IRET and brought Entin along with him. Together they made seminal contributions to the study of tax theory and tax policy development. Based on their work together, Entin was a valuable adviser to the National Commission on Economic Growth and Tax Reform in 1996, which I chaired at the request of Speaker of the House Newt Gingrich and Senate Majority Leader Bob Dole.
Ture was one of the unsung heroes of the supply-side economics movement, and Entin is continuing the tradition he established of devising practical policy prescriptions grounded in rigorous scholarship. Ture helped revive and elaborate a neoclassical, microeconomic-based approach to the study of macroeconomics. In the process, he provided policymakers with a persuasive alternative to Keynesian economics.