This column originally appeared on TaxVox.
Politicians love to claim that they have given us something. “We want to give you, the American people, a giant tax cut for Christmas. And when I say giant, I mean giant.” So proclaimed President Trump, with words echoed by many Congressional leaders.
There were only two problems with the statement. The tax cut wasn’t giant and the President and Congress didn’t give us anything.
Not that Republicans stand alone in their claims of generosity. Democrats claimed they gave millions of Americans health insurance when they passed the 2010 Affordable Care Act.
But while Congress and the President credit themselves for giving us something, they really are transferring public resources to some of us from others. In aggregate and over time, we must pay for anything they claim to give.
I find it easiest to divide the two sides of the balance sheet required for new legislation into giveaways and takeaways. Giveaways generally come in the form of tax cuts and spending increases, takeaways in the form of spending cuts and tax increases. Just as sources of funds must equal uses of funds for the budget as a whole, so also for new legislation must the sum of new giveaways be balanced by new takeaways.
Of course, some of the takeaways can be deferred through borrowing. Politicians never count those costs when announcing the amount they claim to have given us.
In a 1976 column in the journal National Observer, entitled, “Taxes and the Two Santa Claus Theory,” conservative columnist and editor Jude Wanniski argued that Republicans needed be the party of tax cuts the way he asserted that Democrats played Santa Claus when they increased spending for social programs or passed redistributionist tax legislation.
At that time, Republicans had long been a minority party, particularly in the House of Representatives. Wanniski argued that they would never gain power as long as they simply opposed Santa-like spending increases or promoted raising taxes to pay for them.
In some ways, he got what he wanted. In the first years of the Republican presidencies of Ronald Reagan, George W. Bush, and Donald Trump, Congress passed tax cuts.
Trump’s description of the Tax Cuts and Jobs Act (TCJA) as a Christmas gift lends full credence to the belief that political parties try to retain power by acting as Santa. What Wanniski hadn’t fully anticipated was how far we have gone toward having two Santas acting at the same time, with scheduled spending increases being matched by new tax cuts that make the whole federal fiscal system increasingly unsustainable.
I’m not arguing the relative merits of tax cuts versus new spending. Government can—and should—shift resources in ways it believes will provide a future return to society. But that is different from saying that the money is free, like a gift from Santa.
For instance, Republicans believe shifting resources to business in the form of tax cuts in the TCJA will generate an economic return just as families believe they would generate a return by shifting money to pay for their children’s education. But neither Congress nor families can claim that the transaction is free, just because the money came from additional borrowing on our public or family credit card.
While both government and personal debt tempt us to live for today, only with government debt can Santa leave an IOU for Americans not yet identified and in some cases not yet born. The two competing Santas explain better than anything why borrowing in the U.S. has increased extraordinarily in recent decades, continually rising to new all-time highs outside of a World War II peak that was scheduled to decline quickly once war spending ended.
While analysts at the Tax Policy Center and Joint Committee on Taxation can distribute specified changes in the law—for instance, who benefits from higher child tax credits—they can’t identify the future losers. Thus, the distributional tables, just like claims that our elected officials have given us something, are often incomplete and in some ways misleading. While these analysts can and do at times examine implications such as how tax cuts or spending increases might eventually be financed, those analyses get much less press attention than the explicit listing of today’s known “winners” and “losers.”
The damage to good budget policy is obvious. It will always have trouble getting traction as long as we fail to recognize that we, not the President or Congress, are the ones who pay for what they claim to give away.
This column originally appeared on TaxVox.
Among the most complex provisions of the Tax Cuts and Jobs Act (TCJA) is its special tax deduction for income earned by pass-through businesses. In an attempt to prevent the new tax break from turning into an unmitigated revenue loss for the Treasury, Congress created a set of complicated “guardrails” to limit its use. Almost all tax experts agree that many businesses will need to consult tax lawyers and accountants for years to come to minimize taxes and insure compliance with the new law. Perhaps millions will change their form of ownership. Some taxpayers will also find it desirable to create multiple layers of corporations, partnerships, and other pass-through businesses, with varying degrees of ownership, to minimize their tax burden.
Yet, the official “complexity analysis” that accompanies the just-passed TCJA falls far short of telling the real story of how challenging this provision will be for many business owners.
In 1998, Congress enacted the IRS Restructuring and Reform Act that, in part, required the staff of the Joint Committee on Taxation, in consultation with the Internal Revenue Service and the Treasury Department, to provide a tax complexity analysis “for all legislation reported by the Senate Committee on Finance, the House Committee on Ways and Means, or any committee of conference.” The analysis is supposed to specify any added costs or additional recordkeeping for individuals and small businesses, as well as any need for regulatory guidance.
As required, JCT did produce such an analysis just before the House passed the TCJA and again just before Congress adopted a final bill. But because Congress produced the TCJA in less than two months, it appears that JCT, IRS, and Treasury were overwhelmed with other work and simply did not complete a proper complexity analysis. The pass-through provisions are the most striking example of this shortcoming.
Some provisions of the new law attempt to deter employees from converting themselves into a business or independent contractor to benefit from this tax break. Others attempt to separate “owners” from “employees” even when both make the same amount of money from the same partnership. Limits are placed on the deduction for income from “personal service” companies. Other limits are based on taxable income or wages paid. Meanwhile, because Congress established a corporate income tax rate that is significantly lower than the individual income tax rate, businesses must decide whether to organize specific business activities as pass-through entities or as a taxable corporation.
Here is JCT’s full analysis:
It is estimated that the provision will affect over ten percent of small business tax returns.
It is not anticipated that individuals will need to keep additional records due to the provision. It should not result in an increase in disputes with the IRS, nor will regulatory guidance be necessary to implement this provision. It may, however, increase the number of questions that taxpayers ask the IRS, such as how to calculate qualified business income and how to apply the phaseins of the W–2 wage (or W–2 wage and capital) limit and of the exclusion of service business income in the case of taxpayers with taxable income exceeding the threshold amount of $157,500 (twice that amount or $315,000 in the case of a joint return), indexed. This increased volume of questions could have an adverse impact on other elements of IRS’s operation, such as the levels of taxpayer service. The provision should not increase the tax preparation costs for most individuals. The IRS will need to add to the individual income tax forms package a new worksheet so that taxpayers can calculate their qualified business income, as well as the phaseins. This worksheet will require a series of calculations.
The analysis says the provision will affect “over ten percent of small business tax returns.” But a number between 10 percent and 100 percent is not very informative, and in any event, there are millions of small businesses.
The analysis asserts that “[i]t is not anticipated that individuals will need to keep additional records” and “[i]t should not result in an increase in disputes with the IRS nor will regulatory guidance be necessary.” This seems implausible at best given the obvious potential for gaming this provision.
The analysis’s claim that “[t]he provision should not increase the tax preparation costs for most individuals” is downright misleading. Since most individuals are not business owners, it is self-evident that their costs won’t increase due to this provision. But the real question, which the analysis does not answer, is what about those individuals who are business owners—or employees who can convert to being business owners as independent contractors? Almost surely, the increased record-keeping alone should increase costs.
Perhaps most importantly, the analysis is silent on the required planning “costs to taxpayers” that nearly always exceed those associated with filing tax returns.
As a former Treasury official, I greatly respect those nonpartisan offices that serve the public so well, such as the JCT and the Treasury’s Office of Tax Policy. I once dedicated a book to IRS personnel, who do the thankless task of reducing the share of the taxes borne by honest taxpayers. So, I do not make this criticism of their work product lightly.
In the case of the complexity analysis of the TCJA, these agencies have more work to do to fulfill the spirit of the law, not just its letter. More important, Congress needs to legislate in a way that allows staff to fulfill the 1998 statutory mandate.
Thanks to Robert Pear of The New York Times, who first asked me about the House bill’s complexity analysis.
- that presidents, Cabinet members, legislators, and other elected officials would be held to the same ethical standards and penalties for wrong-doing as entry-level civil servants;
- that Congress would attack sycophancy directly by slashing the number of political appointees and the larger number of would-be appointees who view it as the route to power;
- that the media would examine how its pursuit of stories with sensationalism and conflict has been exploited by terrorists and unethical politicians alike to garner attention and power;
- that news shows would recognize that interviewing paired Democrat and Republican spokespeople leaves out the plurality of people whose expertise, not political leanings, drives what they say;
- that more voters would stop equating so much of their personal identity with some political party banner so they would find it easier to object strongly to the wrongful actions of those for whom they voted;
- that laws would be written to penalize more the individuals who are ultimately responsible for corporate misbehavior and less the consumers and workers who often bear the costs;
- that churches claiming to prioritize the poor would come to recognize the symbolism of keeping the poor box at the back of the church and passing a collection plate for the poor only after passing one for themselves;
- that athletes signing lucrative contracts would start negotiating over money for community and public purposes rather than just themselves;
- that charities would unify around promoting the good and addressing the bad in their midst; and
- that everyone of goodwill would take heart by recognizing how important you are for bringing order out of disorder, peace amid conflict, and, for me, a continuing sense of thankfulness and hope.
This post originally appeared on TaxVox.
Bismarck is credited with the warning: “If you like laws and sausages, you should never watch either one being made.” It is never truer than with tax legislation, and Tax Cuts and Jobs Act (TCJA) is no exception.
Even the Tax Reform Act of 1986, held by many as a model of reform, resulted in its fair share of deform and complexity. The reason then was the same as it is today: Accommodating the demands of lawmakers requires special interest give-backs (reversing or modifying proposed reforms) that are, in turn, paid for with badly-designed and gimmicky revenue-raisers.
Here are just a few examples of how either the House or Senate Finance Committee versions of the TCJA would move backward from stated goals of reform: While their aim is to lower tax rates, they’d create backdoor individual income tax rate increases. They’d delay the effective dates of some provisions and make others temporary, decrying the use of such gimmicks in current law, then almost bragging that “a lot of this is a gimmick” in defining their own efforts. They’d raise taxes for many families with children in the name of reducing taxes to help them meet their living expenses, and they’d make some business taxes more complex while purporting to simplify them.
“Bracket creep” that raises average tax rates. As peoples’ incomes rise over time due both to real wage increases and inflation, they move into higher income tax brackets. Current law protects them in part by indexing the tax code for inflation using the Consumer Price Index. But the House and Senate Finance bills would use a less generous inflation index so tax rates rose more quickly as people moved into higher tax brackets faster and indexed tax credits would grow more slowly. The effect is relatively modest to start but it compounds decade over decade.
A new bubble tax rate. Copying one gimmick from the ’86 Act, the House bill would require people with moderately high incomes to pay a 6-percentage point surtax. My colleague, Bill Gale describes how this and other provisions would create a hidden combined top marginal tax rate of 49.4 percent. But the House bill adds yet another gimmick that would raise marginal tax rates even faster on more people.
The added glitch in creating a bubble top rate. Though the 1986 law, too, imposed a surtax on some taxable income, it was made transparent in a new tax rate table that showed rates of 15, 28, 33, then 28 percent. The 33 percent rate wiped out benefits of the lower income tax rates. The new bill requires a new more complicated calculation because the surtax is imposed on adjusted gross income, not taxable income. As a result, more people pay the surtax and adjustments to income that reduce taxable income, such as charitable deductions, are disallowed for purposes of the surtax.
Exchanging a higher standard deduction and an indexed child credit for removal of personal exemptions. This combination of tax policies was not based on any theory of taxation of the family. Elsewhere I have explained how it arose in response to simplistic proposals to double the standard deduction. And my colleague Elaine Maag gives examples of some of the losers. One tradeoff: Displacing a personal exemption indexed for inflation while adding a child credit that for most households would not be indexed for inflation would gradually increase taxes on families with children in a bill that is touted to be pro-family. And, oh, the standard deduction isn’t being fully doubled.
The new partnership and flow-through business rules. My colleague Steve Rosenthal details some of the problems with the new proposals for taxing “pass-through” businesses such as sole proprietorships, S-Corporations, and partnerships. These ideas would be extremely complicated for taxpayers. They’d also violate a key principle of the ’86 Act—that top income tax rates would not be greatly different for different types of income, whether earned by workers or owners, corporations or partnerships. Noncorporate tax law, in turn, has long recognized the near-impossibility of trying to distinguish returns for labor from those for capital. The traditional solution: set similar top rates for all types of income and all types of owners.
But the House and Senate bills turn this on its head by trying to lower taxes for corporations and some other business owners, but not for workers or working owners of some firms. The big winners are the lawyers and accountants already making millions of dollars finding ways to save their clients billions of dollars by changing ownership arrangements in new, creative, ways.
As Bismarck knew, the price of any “reform” is often the deal-making necessary to round up votes. If the net result is better law, these changes may be the cost of doing political business. If not, it is just worse tax law.
This post originally appeared on TaxVox.
Do you want to know why tax reform is so hard? Consider one seemingly simple idea that has been floated by President Trump and congressional Republicans in their Unified Framework: roughly doubling the standard deduction. The closer you look at this proposal, the more you see how complicated it is.
Is doubling the standard deduction a good idea? Well, maybe. By granting more taxpayers a larger reduction in taxable income without making them itemize a list of specific deductible expenses, boosting the standard deduction can substantially simplify the tax filing process. It would also reduce taxes for some middle-income households. But…
It costs money. The Framework would partially offset the expense by eliminating the personal exemption. But…
Exchanging a larger standard deduction for repeal of the personal exemption raises the relative burden of taxes on households with children. But…
The Framework attempts to offset the elimination of personal exemption with a bigger child credit. That might help reduce some of the higher taxes caused by repealing the personal exemption. But…
These adjustments cost revenue and so would reduce the amount of rate reduction that Congress can pay for. And…
The share of households (including nonfilers) that itemize with the larger proposed standard deduction would be reduced, perhaps to as little as 5 percent, depending upon what happens to specific deductions. But…
If Congress reduces the number of itemizers, it would also reduce the number of people who’d take deductions for charitable giving, home mortgage interest, and state and local taxes paid. That, in turn, has charities, homebuilders, and state and local government officials worried. And…
Retaining tax incentives only for the highest income households makes zero sense for provisions meant to encourage families to own homes or give to charity. But…
Congress could create alternative subsidies for charitable donors, homebuilders, and state and local governments. But…
That could cost more foregone revenue and reduce the size of any tax rate reduction that could be paid for. And, whoops…
So far, we’ve pretty much forgotten about the poor and moderate-income taxpayers who would benefit little or not at all by an increase in the standard deduction. But…
To help them requires yet more money and reduces the amount of rate reduction that can be financed in a tax reform package. And, thus,
Each decision on each individual change not only causes new interactions affecting the amount of revenue other provisions in a bill would gain or lose, but…
It alters the distribution of winners and losers among individuals and industries that also must be addressed. And…
These are only some of the effects of one simple reform Now, think of what Congress and the President must tackle in a bill that revises the taxation of capital and labor, multinational corporations and partnerships, pensions and insurance. And…
You will get some inkling of why, as the president might say, “nobody knew” tax reform would be so hard.
This post originally appeared on Forbes.
Saying that one is for tax reform doesn’t provide much information about what is being sought or how to do it. Potential options extend almost infinitely, as do amendments to any set of options. So how does one both focus and ensure that reform, proposed or enacted, serves the public in a meaningful way? Here I identify eight lessons that were vital to the organization of the Treasury study (“Treasury I”) that led to the Tax Reform Act of 1986, the only comprehensive base-broadening tax reform in the hundred-plus history of the income tax
- Know the unique requirements and opportunities of the time. No past reform is repeatable. Today is not yesterday. Society today has new needs, different things to fix, novel opportunities, and changing leadership. The 1986 reform was made possible by many factors, including growing tax shelters that everyone agreed were unfair and inefficient, a President who cared about tax rates more than just about anything else, high levels of productivity as baby boomers moved into their peak earning years, Congressional leaders like Senators Bill Bradley and Jack Kemp who had been promoting tax reform, and budget acts in 1982 and 1984, along with Social Security reform in 1983, that left room for at least a reform that didn’t have to raise revenues.
- Don’t try to build up reform out of a stack of wants. The more politicians try to organize reform by supporting a bunch of giveaways, as opposed to allowing tax experts to give them viable options for fixing different parts of the system, the more that they are likely to suggest provisions that don’t add up, are inconsistent, fail to meet stated objectives, can’t be administered, and cause other unintended consequences.
- Use principles, not symbols, to drive choices. I’m not so naive as to believe that symbols aren’t important. That’s why every tax bill, no matter how much it deforms, tends to get the label of “reform.” But principles should guide where one is going, and create borders to deter consideration of items that don’t meet any principle well. Tax policy principles center on: equal justice or equal treatment of equals or “horizontal equity;” efficiency; progressivity (though the degree is open to dispute, the principle is not, since, among other reasons, those with no income can’t pay tax); limits on the disincentives to work, save, or invest that are inherent in any tax; and “administrability,” or avoiding both high enforcement costs and the corruption that rises when cheating can’t be controlled.
- Build a baseby focusing on those particular principles, like equal justice, accepted by conservatives, liberals, and independents alike. The main fight between political parties over many decades has been between two principles: progressivity and avoidance of the distortions that higher tax rates create. That still leaves huge amounts of the tax system to be reformed on the basis of concerns that are widely shared. When the roof leaks, families can work together to fix it even if they still are in conflict over whether to spend money on a new bed or sofa.
- Always keep in mind the balance sheet within both the tax system and the broader budget. Nothing deters a reform process more than trying to give away money without immediately calculating who will pay the bill—whether through tax increases to offset the tax cuts, spending decreases, or rising debt and interest costs to be paid by future generations.
- Engage those health, housing, charity, pension, and other policies that are woven into the tax code. With about one quarter of all federal subsidies lying within the tax rather than expenditure system, these issues are hard to dodge even in modest reforms and impossible to avoid in comprehensive reform. Whether it’s the hundreds of billions of dollars spent on the tax subsidy for employer-provided insurance, or housing tax subsidies that cost more than the budget of the Department of Housing and Urban Development (HUD), tax reform almost inevitably will affect those policies. To the extent that tax subsidies are maintained, they should still be reformed to be more effective in, say, increasing charitable giving or promoting adequate retirement saving.
- Gather evidence continually, rather than waiting to provide ex post apologetics for a final proposal. Among the many reasons for success in 1986, Treasury and IRS got very busy gathering evidence on growing problems such as the tax shelters of those days, on who benefited from various provisions, and on what the academic literature said. Some efforts require long-term investments, such as in individual and corporate tax models, and even then one often has to change traditional ways of doing things. Before 1984, tax changes were distributed by adjusted gross income (AGI), which meant that the fictitious negative partnership income of tax shelters was subtracted from AGI in a way that made many rich look poor and tax shelter reform look like an attack on the poor. This had to be amended. Many of these efforts take months or years to develop.
- Empower well the plumbers, architects, and engineers—your crew in the Treasury’s Office of Tax Policy and the Congressional Joint Committee on Taxation—if you want a structure that will stand. They often know what pipes can or need to be welded together, but they only do what they are empowered to do in a world where a lot of people make crazy claims. For some reason, smart doctors, lawyers, and entrepreneurs when elected or appointed to political positions think that they have miraculously garnered the talent to weld together the pipes through which explosive gas flows.
Want to predict the probability of reform? Simply go through the list and ask yourself the extent to which those in charge at any stage understand and have a plan for dealing with these types of issues.
This post originally appeared on TaxVox.
Hurricane Harvey’s historic flooding has brought out the best in many people. They have put their lives in danger to save strangers, shared their food, and offered their homes. Citizens across the country are contributing to the United Way, Red Cross, community foundations, and churches. Race, creed, and social status seem to make little difference, and the political issues that divide us suddenly seem petty, almost separated from the real world in which we live, suffer, or thrive.
But because charities and individuals can do only so much, we have turned to government to act on our behalf. But even as we ask government to coordinate efforts and bear a large share of the cost of repair and rejuvenation, a question lingers: Who should pay for those costs? Or to ask another way, who should feel entitled to claim they are exempt from the social compact that says we should use our tax dollars to assist victims of an historic flood they could not predict or plan for? Once one broadens this question to include helping victims of poverty or poor health, or paying some share of the cost of our national defense, it lays bare the issue of who should pay taxes.
Join me, therefore, in speculating about who should be exempt from sharing in the tax burden for helping victims of Hurricane Harvey.
How about owners of capital? They claim they benefit society by building and holding onto wealth and promoting growth by investing that wealth. Though often exaggerated, their case has enough merit to support economic and legal arguments for converting the income tax to a tax on consumption. Indeed, our current tax system combines features of both and reflects the divisions over the role of savings and investment in enhancing our well-being.
Many owners of capital even claim they should pay “negative” tax rates, at least on returns from new investments through generous tax depreciation or expensing of debt-financed physical assets. Should the tax system exempt owners of capital who consume only modest portions of their income from helping to finance assistance for the victims of Harvey?
How about the poor? We exempt low-income households from income tax (though the poor often pay sales, excise, and payroll taxes), a choice that also has some merit. After all, how can one expect the poor to pay taxes when they can’t afford adequate food or housing? Of course, that issue is complicated because low-income people often receive more in government support than they pay in taxes.
How about the middle class? We’re running huge federal deficits today largely because no one wants to raise their taxes or cut their benefits. Democrats are willing to tax the rich and Republicans will take away benefits from the poor, but both parties appear to coddle the (very large) middle class. It is true that middle-income workers have seen little wage growth or upward mobility in recent years, but does that mean they should not do their part to help government cover the costs of floods or other public goods and services that otherwise would add to deficits?
How about the elderly? Yes, many are retired and on fixed incomes. But many are reasonably well off and enjoy a permanent tax exemption on income from sources such as Roth retirement accounts. Can we as a nation go back on that deal? How about those who die with large estates? They could have realized income by selling assets and consumed that wealth when alive. But if they did not, should they be subject to an estate tax upon death? How about companies that get special business tax breaks? Don’t they need tax help to ensure their competitiveness with firms in other countries?
And, finally, how about you and me? Why should we have to pay taxes when it appears almost nobody else does? But then there are those people suffering in the wake of Hurricane Harvey.
This post originally appeared on TaxVox.
For the umpteenth time, Congress and the Trump Administration are going back to the tax reform drawing board, just as they have had to do for health reform. These policymakers could help themselves by recognizing that you can’t go back to a place you’ve never been.
Many policymakers look to the Tax Reform Act of 1986 as a model for successful reform, but largely ignore its lessons. Here is one of the most important: the success of the ’86 act was built on a solid core—a set of fundamental principles accepted by conservatives and liberals alike. They included equal justice for those in equal circumstances, simplicity, and–to a large extent–efficiency.
Agreeing on that core made it possible for reformers of all stripes to first address issues of common concern before turning to more conflict-laden issues, such as the taxation of capital income. While the political process of passing the ’86 act bent those principles, it never broke them. And the result was the only comprehensive revenue-neutral reform in the hundred-year history of the income tax.
Don’t get me wrong, 2017 is not a replay of 1986. Heraclitus was right: you can’t step into the same stream twice. But you can learn from previous crossings.
To start, it’s a myth that there was more friendly cooperation in the mid-1980s. Indeed, political war raged both within and between political parties.
Democrats were smarting over their electoral losses while Republicans fought over whether President Reagan was “being Reagan” whenever he did something one faction disliked.
Within the Treasury Department, extreme supply-siders who held that tax cuts paid for themselves fought with those who favored cleaning up the tax code rather than simply giving away money through tax cuts. Even some reformers questioned whether they should spend time on a tax reform study commissioned by President Reagan, which was largely viewed as an attempt to avoid debating tax issues during the 1984 presidential campaign.
In early 1984 when I became the economic coordinator of Treasury’s tax reform study, people in the Office of Tax Analysis were struggling over how to start. Should we focus on consumption taxes or income taxes? Should the Administration consider an add-on value added tax to finance a smaller income tax? Should we aim for a modest bill or the more comprehensive plan the Administration eventually championed? Should we expand tax breaks for business investment or pare them down to finance lower rates?
As an initial step, I encouraged Treasury staff to divide the overall reform effort into about twenty modules, each covering dozens of specific tax code provisions. Almost everything was on the table: pensions; housing; health; treatment of marriage, children, and the elderly; tax shelters; capital gains; depreciation; and international taxation, to mention only a few. We prepared briefs for Treasury Secretary Donald Regan on how to reform each area, and asked him to keep an open mind about politically difficult choices at this early stage and leave compromises of the principled tax reform options to later political bargaining.
To establish a solid core of reforms, we first dealt with items that would be common among an ideal income or consumption tax, except for taxation of capital income. While we aimed for roughly the same level of progressivity for the overall tax system as the then-current tax code, we did not focus on the progressivity of each particular provision. We recommended killing an inefficient subsidy favoring low- or middle-income taxpayers since on average we could hold those households harmless by reducing their tax rates.
Today’s reformers would benefit by creating a similar core on which to build reform. For example, defenders of the status quo would have a harder time making their case if reformers can show that a new tax system would increase charitable giving, support home ownership, make education more accessible, or protect retirees without losing as much tax revenue as the current system.
Similarly, they could simplify multiple higher education subsidies, capital gains taxation, and various definitions of a “child.” They could reduce penalties on marriage and on some families with children. And they could curb tax-driven investments without constraining economic decisions.
Contrast this approach with the flailing so far, where elected officials began by proclaiming support for cutting taxes on corporations and then, by extension, partnerships and the middle class. At best that’s like announcing a low purchase price for both new luxury and middle-income condos before ever designing the building housing them. Lawmakers would have much more success by first carefully creating a solid foundation for tax reform and then building out the new reforms.