Paul L. Caron

Wednesday, November 29, 2017

Burman: Congress Should Slow Down On Tax Reform And Ask, What Would Reagan Do?

Leonard Burman (Syracuse), Congress Should Slow Down On Tax Reform And Ask, What Would Reagan Do?:

Congress is rushing to rewrite the tax code before Christmas. True tax reform would be a wonderful present for America, but the current tax bills are deeply flawed, the product of a hasty and partisan process. Congress and the president should slow down and go back to the drawing board.

Compare what we are seeing now with the process that led to the landmark Tax Reform Act of 1986. It started in January 1984 when President Reagan directed his Treasury Department to put together a comprehensive tax reform plan that the Treasury would release later that year after the presidential election. While many dismissed this as an election-year gambit, nobody told the Treasury analysts who produced an epic three-volume proposal that justified the most sweeping reform in history. (I joined the Treasury staff midway through tax reform process.) A revised version reflecting input from the White House released in 1985 provided a comprehensive grounding for serious tax reform.

Prodded by the popular president and his staff’s excellent spadework, Congress began to consider every aspect of the tax code and various reform options. The House held 30 hearings and spent 26 days marking up legislation in committee. The Senate held 36 more hearings in 1985 and 1986. The Senate debate in June 1986 lasted a full month. The ultimate bill passed with broad bipartisan support and President Reagan signed it on October 22, 1986—almost two years after Treasury released its initial plan.

Fast forward to 2017. There have been zero hearings to consider H.R. 1, the Tax Cuts and Jobs Act (TCJA). Treasury’s contribution to the debate was a one page set of bullet points released to great fanfare in April followed by a hardly more detailed “Unified Framework” in September. The Treasury Secretary dismissed his own staff’s analysis of key elements of the plan.

The House passed a 448-page bill on November 16 after a mere two weeks of deliberations. The Senate also skipped hearings on the TCJA (although they did hold three hearings on broad issues in anticipation of a tax reform push). Finance Committee Chair Orrin Hatch (R-UT) introduced a “conceptual mark” (no legislative language) on November 9 and the panel approved a 515-page amended bill 8 days later. GOP leaders hope the full Senate will pass the bill this week.

So far, no Democrat in either the House or the Senate has voted for the bill.

This partisan, helter-skelter process has produced deeply flawed legislation. Some defects are already apparent, but others may not emerge until after President Trump signs the bill into law.

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We have been working on this for over 7 years. There is zero reason to slow down.

Posted by: TheTurk | Nov 29, 2017 1:16:59 PM

Whatever you do, please don't call this sausage making at the sewer plant, tax reform. The only driving force is Wall Street is threatening to have a snit if they don't get 20% corporate tax rates and repatriation. Frankly, I don't think corporations should be taxed so long as they are reinvesting profits. But that's not what happening today. Wall Street is a casino and corporations are using every dollar they have to buyback stock and pay dividends. Cutting the tax rate will just give them more money to place on the roulette table.

Posted by: Dale Spradling | Nov 30, 2017 5:38:24 AM