“Following the collapse of the House GOP health plan, President Trump and many congressional Republicans say they will pivot to tax reform. Passing that initiative, they insist, will be easier. For example, on Friday Treasury Secretary Steve Mnuchin put it this way: “In a way, it is a lot simpler. In health care, it’s a much, much more complicated issue.”
Mnuchin and others could not be more wrong. If lawmakers think rewriting the nation’s health laws are hard, just wait ‘til they tackle full-blown tax reform. There is a good reason why a major rewrite of the tax code has not happened for more than three decades. And here are eight reasons why true tax reform will be an even tougher climb than a health care redesign“.
Treasury Secretary Steven Mnuchin listens at right as President Donald Trump speaks during a meeting on the Federal budget Feb. 22 in the Roosevelt Room of the White House in Washington. (AP Photo/Evan Vucci)
If ever there were a timely article for accountants, bookkeepers, small business owners and even individuals to read, it is this one from Forbes. In the italics above is the first portion of the article. Below begins the list of reasons Forbes believes tax reform is going to be very hard:
The revenue problem. If lawmakers can’t agree on how much money they want their new tax code to raise, any initiative is doomed. But Republicans have reached no consensus about whether they want a tax reform that raises the same amount of revenue as current law, or a huge tax cut. Speaker Paul Ryan (R-WI) says he wants revenue-neutral reform. Trump talks about tax reform and tax cuts as if they are interchangeable.They are not. And the problem can’t be papered over with rhetoric.
Who wants to slash tax breaks? This is the nitty-gritty of the winners-and-losers problem. In revenue-neutral reform, popular tax cuts must be paired with unpopular tax increases. It is not hard to find lawmakers, especially of the Republican persuasion, who are enthusiastic about cutting tax rates. But who will be willing to take the heat for killing popular tax breaks to pay for those rate cuts, especially in a partisan bill? Just imagine the negative campaign ads.
Leave a reply