A quarter century ago, America had a brand new income tax system and an emerging position as the world’s lone superpower. Whites dominated a political debate conducted on television, and baby boomers had just become 40-somethings.
A quarter-century from now, every one of those conditions will have vanished—with profound implications for the nation’s economy, diplomacy, politics and culture.
As the release of House Ways and Means Chairman Dave Camp’s tax reform proposal this week showed, there’s rising interest in the sort of fundamental rewrite of the IRS code that last occurred in 1986 under President Ronald Reagan. But some veterans of the Washington wars foresee the gradual emergence of a different option: a system that moves toward taxing not income but consumption—especially consumption of energy—to achieve economic and environmental goals at the same time.
“This reminds me very much of the kind of transformation when horse-and-buggy days were made obsolete by Ford and by others,” said Steve Bell, a longtime Republican tax and budget aide on Capitol Hill. “I do think we will move to a carbon tax of some kind. The carbon tax will be one piece of a consumption regime.”