What You Should Be Reading: March 2026

Welcome back to “What You Should Be Reading,” a monthly blog series in which the Taxpayers Protection Alliance (TPA) highlights some of the worthiest recent contributions to today’s public policy debates.

This month’s selection includes a compelling argument for simplifying the Byzantine tax code, a reboot of the familiar story in which the federal government’s attempt to fix affordability proves self-defeating (housing-policy edition), and a digestible brief on the tangled concept of zoning.

To avoid invidious comparisons to the TSA, we will not subject you to any more delays…

Mercatus Center: “Simplifying the Tax Code Is a Pro-Growth Policy”

By the time April 15 (Tax Day) arrives, Americans will likely have spent close to 7.1 billion hours—or roughly 13 hours per taxpayer—this tax season navigating the filing and reporting requirements of the federal tax code. This equates to $536 billion in time lost, or nearly 1.8 percent of GDP. Moreover, the Internal Revenue Service (IRS) estimates that this annual ordeal costs Americans roughly $148 billion out of pocket.

Many political leaders profess to want a fairer tax code. But by “fairer,” they often mean more exemptions, more credits and deductions, and still more words added to the 4.3 million words that already comprise the Internal Revenue Code.

As the American tax code expands, its base shrinks—so that tax liability falls on an increasingly smaller number of people. This is the “fairness” of the current tax system. Moreover, the value of forgone revenue due to the narrowing of the base has nearly doubled in the past decade, and the costs of compliance increased for everyone. “These compliance costs,” writes Jack Salmon, a research fellow at the Mercatus Center, “are not merely an administrative inconvenience; they reflect deeper structural inefficiencies embedded in the tax code.”

Salmon argues: “Corporate income taxes, depreciation rules, and taxes on the normal return to capital all raise the user cost of capital, thereby discouraging marginal investment.” Furthermore, capital gains taxes harm incentives to save. Since what is saved by some is invested by others, saving and investment are two sides of the same flow of capital. American criminal law forbids double jeopardy; in American tax law, one finds no such protection. The capital stock—built through investment funded by saving—on which economic growth depends is effectively taxed at both ends.

Salmon defends tax simplification “not merely as an administrative reform, but as a pro-­growth policy.” His research bears out this conclusion.

Simply broadening the tax base would yield sizable gains in GDP. He finds that, after implementing a flat income tax with no personal deductions or exemptions, “economic output would rise immediately by approximately 4.5 percent, followed by an additional 1 percent increase over the subsequent 15 years.”

More staggering still is the estimated effect on GDP from the shift to a tax system that fully exempts saving and investment. “[F]or example, realizing an 8 percent increase in the output level over 10 to 20 years corresponds to an additional 0.4 to 0.8 percentage points of annual growth during the transition period,” Salmon contends.

Salmon’s research catalogs the reasons the current tax system falls short of being pro-growth: distortive provisions and the complexity they beget disproportionately harm smaller businesses and new entrants, hurt entrepreneurship, hamper growth, and hollow out any perception of fairness and equality within tax law. None of these criticisms are unfounded, and all betray the ideal of a land of dynamism and opportunity.

Read the full policy brief here.

American Enterprise Institute: “Senate Investor Ban To Cut Supply & Hurt Low-Income Families”

Policy proposals that aim to bar large institutional investors (LII) that own 350 or more properties from buying and owning single-family rentals are born of if-it-feels-true-it-must-be-true reasoning. Casting LII as the main culprits behind rising home prices may be instinctively attractive. But accusations against LII are hardly substantiated given their small market share.

American Enterprise Institute (AEI) scholars Tobias Peter and Edward J. Pinto argue, “Currently, LII own about 0.65% of the nation’s single-family homes. Further, over the last two years, LII acquired about as many rental homes as they sold.”

LII tend to concentrate their activity to ease home management, thus achieving economies of scale. Some suggest that where the housing market is most strained, LII may still push housing prices up.

However, the argument that they dominate housing market, but only in certain areas, also rests on intuition. “LII account for approximately 4.2% of the housing stock in Atlanta, 2.6% in Dallas, and 2.2% in Houston.” Nor do LII usurp homebuying and foreclose “the road to housing” for would-be homeowners. The authors explain that these fictitious claims likely originate with statistics that conflate investors of all sizes.

“The nation faces an estimated shortage of six million homes, while LII own only about 800,000 single-family rentals. An often-overlooked aspect of LII activity is their role in expanding housing supply.”

Despite their insignificant market share, LII nevertheless contribute to new housing construction and help keep rental housing more affordable for specific households. Peter and Pinto identify them as “a ‘missing middle’ segment of the housing market: [h]ouseholds that are not able to buy but are not well served by multifamily housing.”

If the federal government curbs LII’s ability to purchase and own single-family rentals, its policy will create more housing problems, especially for many single-family rental tenants. Self-defeating government policies become truly damaging when those against whom the government wages an uneven regulatory battle in the name of affordability are, in fact, its allies in that fight.

The AEI scholars explain the many ways that LII support the housing market; here are just a few:

• Contribution to Housing Supply: Built-to-rent is a significant source of new housing construction and helps meet demand for households who would otherwise be unable to purchase a home.
• Rehabilitation of Housing Supply: By upgrading homes efficiently at scale, LII help return distressed housing to productive use and improve the quality of the existing housing stock.
• For Whom Do Institutional Investors Provide Housing? Residents are working families with children who seek single-family living, but who are not well served by existing ownership or multifamily options.

Read the full report here.

The American Institute for Economic Research: “The Economics of Zoning, Explained”

The federal government’s fiddling with the housing market is unsurprising. The anxieties caused by rising housing prices and limited housing supply are increasingly felt nationwide.

Among affordability-related issues, housing commands the most attention and largely shapes how affordable life is. Half of urban renter households spend more than 30 percent of their income on housing, and 34.3 percent of rural renter households do. A new policy brief from the American Institute for Economic Research (AIER) delves into a major and largely misunderstood adversary of the supply-side housing cause: zoning.

On 75 percent of residential land in many American cities, nothing but a detached single-family home may legally be built. If this staggering statistic sounds perplexing, it should. Single-family zoning is virtually unknown outside the U.S. and Canada.

AIER scholar Jason Sorens explains: “Zoning limits housing supply in two ways: raising monetary costs and raising time costs … Zoning often requires more land to be used to build than a property owner might prefer to buy. Zoning can also raise the monetary cost of building by requiring particular building features, such as parking spaces.”

The familiar supply-side constraints that zoning imposes are apparent. However, as Sorens also notes, “Developers have an incentive to develop higher-priced properties, so that the fixed ‘land use tax’ represents a smaller proportion of the ultimate sale price”––all while “[l]ots of Americans want starter homes but are unable to find them, because even a small house is costly to build in a manner consistent with zoning.”

Since its inception, the goals of zoning were rarely noble. “Zoning was a tool for [urban] separation,” according to Sorens. Over time, zoning was used to further more dubious goals, serving the purposes of social engineering, segregation, and anti-growth environmentalism—an inglorious record, to say the least. In its current form, zoning comprises rules and restrictions from different eras and for dated policy goals, accumulated like decades-old dust. Sweeping reforms are overdue.

Read the full policy brief here.

Note: TPA highlights research projects that contribute meaningfully to important public-policy discussions. TPA does not necessarily endorse the policy recommendations the featured authors make.