Now that the repeal of the Affordable Care Act is dead—at least temporarily—Republicans are moving on to the next big item on their legislative agenda: taxes. For months, a group of Trump Administration officials and top congressional Republicans, known as the Big Six, has been working in private with the goal of developing a plan that the White House, the House of Representatives, and the Senate could jointly endorse. The result of that process, a plan called the “Unified Framework for Fixing Our Broken Tax Code,” was finally released yesterday.
The document proclaims, in bold, all-caps letters at the top, that the plan is “tax reform.” That’s not really the case, at least not in the way that the term has been used for decades.
The original ambition of Republicans in Congress, as they have repeatedly stated, was to rewrite the tax code along the lines of the 1986 Tax Reform Act, which was signed into law by President Ronald Reagan. “This October will mark 30 years since President Ronald Reagan signed into law the Tax Reform Act of 1986—landmark legislation that is recognized as the single largest reform of the U.S. tax code in our nation’s history,” the G.O.P.’s “Better Way” plan, which was the brainchild of House Speaker Paul Ryan, notes. “In many ways, our current tax and political environment is remarkably similar to the one that allowed President Reagan to successfully overhaul the tax code three decades ago.”
The 1986 effort had one simple idea at its core: revenue neutrality. Some taxes would be cut and some would be raised, but the over-all money taken in by the federal government would remain the same. The idea was to make the tax code fairer and more efficient, not to cut taxes for the sake of cutting taxes. Every serious legislative effort in recent years that proclaims to be “tax reform” has abided by this simple metric. Some policymakers have argued that tax reform should also have “distributional neutrality,” so that that no income group is better or worse off after reform. But, at the very least, tax reform as a concept with any meaning is about changing the code in a way that doesn’t add to the national debt.
Ryan used to agree with this. His “Better Way” plan “envisions tax reform that is revenue neutral.” But, even before Wednesday’s announcement, Republicans signalled that they would not be able to devise a tax-reform plan along the lines of the 1986 changes. To use the process known as reconciliation, which prevents a filibuster in the Senate, Republicans must first produce a budget that includes the broad parameters of their rewrite of the tax code. In the Senate, they recently agreed to a budget that included a tax cut that would add $1.5 trillion to the deficit. In other words, they replaced tax reform with tax cuts.
The document proclaims, in bold, all-caps letters at the top, that the plan is “tax reform.” That’s not really the case, at least not in the way that the term has been used for decades.
The original ambition of Republicans in Congress, as they have repeatedly stated, was to rewrite the tax code along the lines of the 1986 Tax Reform Act, which was signed into law by President Ronald Reagan. “This October will mark 30 years since President Ronald Reagan signed into law the Tax Reform Act of 1986—landmark legislation that is recognized as the single largest reform of the U.S. tax code in our nation’s history,” the G.O.P.’s “Better Way” plan, which was the brainchild of House Speaker Paul Ryan, notes. “In many ways, our current tax and political environment is remarkably similar to the one that allowed President Reagan to successfully overhaul the tax code three decades ago.”
The 1986 effort had one simple idea at its core: revenue neutrality. Some taxes would be cut and some would be raised, but the over-all money taken in by the federal government would remain the same. The idea was to make the tax code fairer and more efficient, not to cut taxes for the sake of cutting taxes. Every serious legislative effort in recent years that proclaims to be “tax reform” has abided by this simple metric. Some policymakers have argued that tax reform should also have “distributional neutrality,” so that that no income group is better or worse off after reform. But, at the very least, tax reform as a concept with any meaning is about changing the code in a way that doesn’t add to the national debt.
Ryan used to agree with this. His “Better Way” plan “envisions tax reform that is revenue neutral.” But, even before Wednesday’s announcement, Republicans signalled that they would not be able to devise a tax-reform plan along the lines of the 1986 changes. To use the process known as reconciliation, which prevents a filibuster in the Senate, Republicans must first produce a budget that includes the broad parameters of their rewrite of the tax code. In the Senate, they recently agreed to a budget that included a tax cut that would add $1.5 trillion to the deficit. In other words, they replaced tax reform with tax cuts.