TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, April 12, 2017

NY Times:  Can Trump And Congress Solve The Rubik’s Cube Of Tax Reform?

Rubik's Cube 2New York Times:  Can Trump and Congress Solve the Rubik’s Cube of Tax Reform?, by Neil Irwin:

As Congress and the Trump administration turn their sights on overhauling the tax code, it’s a good time to think about the great three-dimensional brain twister of the 1980s, the Rubik’s Cube.

That’s partly because the first and last time there was a comprehensive rewrite of the tax code, it was 1986. But there is more than that.

What makes trying to solve a Rubik’s Cube so exasperating is that every rotation you make to align the colors on one side messes up something on one of the other sides. Nothing moves in isolation; everything affects everything else, and rarely for the better.

The 1986 tax overhaul took two years. Despite bipartisan backing from the Reagan administration and congressional Democrats, it had many false starts and reversals in its voyage to becoming a law.

“There are thousands of moving pieces in full-blown tax reform,” said Jeffrey Birnbaum, an author of a book about the passage of that legislation, Showdown at Gucci Gulch, and now a public affairs strategist at BGR Group. “Every entity and interest you can think of has a stake, and there are inevitably winners and losers. And if you’re a loser, you know it.”

Add in a more polarized political environment, an administration that has been light on policy expertise, and a Republican congressional contingent that hasn’t shown much ability to pass complex legislation in more than a decade, and the puzzle looks all the more complicated.

Congress and the Trump administration will solve tax reform only by navigating difficult trade-offs. Think of these trade-offs as the six sides of a Rubik’s cube, each of which needs to match up perfectly — but each of which can foul up the others.

  1. Bipartisan support vs. conservative goals ...
  2. Lower taxes vs. higher deficits ...
  3. Concentrated losers vs. diffuse winners ...
  4. Boost growth vs. spread the benefits ...
  5. Permanent vs. temporary ...
  6. Cleverness vs. uncertainty ...

As they seek to resolve these interrelated tensions, tax writers in Congress will face pressure from hometown industries and constituents as well as practically every business lobbyist in Washington — and will also confront the inherent political challenge of getting to a majority.

There are videos online that show how to solve a Rubik’s Cube in a few minutes. The engineers of tax reform should be so lucky.

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