Mr. President – Do You Really Think Tax Reform Will Be Easier?

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March 26, 2017 2:32 PM

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President Trump seems to be saying that the Republican health care idea didn’t work out so well, so let’s do something easier, like tax reform.  Our nation’s chief executive is likely to find an even riskier political mine field taking on taxes.

First, let’s clarify that tax cuts and tax reform are two very different things.  Tax cuts can be part of tax reform, but just cutting taxes is not reform.

If all Trump wants to do is cut taxes, he has a better chance of getting that done.  However, the fiscal conservatives within the Republican Party will give him headaches over that without corresponding cuts in spending.

If you talk to any elected official in Washington, she or he will tell you, “Hey, I am all for tax reform!”  I do believe each of them are sincere in that statement.

The problem centers on what you mean when you say “tax reform.”  Even among politicians within the same party and ideology, the details of what tax reform should entail are very different.

The last rewrite of the federal tax code happened in 1986.  It was enacted then only because a group of political leaders, from the White House to Capitol Hill, were willing to make the painful compromises required to get that done.

When you survey today’s national political scene, it is very hard to find a path to genuine tax reform.  The president may find this just as complicated as health care, if not more so.

For example, President Trump and House Speaker Paul Ryan both have said they favor a Border Adjustment Tax (BAT) that would be levied on all imported goods into the United States.  It would bring a lot of revenue into federal coffers.

Many Republicans are dead-set against the BAT because it would raise prices on all those otherwise cheap imported goods Americans love to buy.  It could also hit American manufacturers dependent on material from overseas.

The president may feel he has a better shot at tax reform than health care changes.  Once he becomes immersed in tax reform, Mr. Trump will wish health care was once again the subject.

It is entirely possible the president can convince majorities in Congress to enact a tax cut.  Tax reform is a much harder sell.

Health care was really complicated.  Tax reform is even more complicated.

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