News Journal: Tax Reform is not going to happen

Conventional wisdom since the election has held that the one thing you could count on, with Republicans in total control of Congress and the White House, was tax reform, including a healthy tax cut for corporations and the top one percent.
It isn’t going to happen.
Yes, I know the White House, Speaker Ryan and Majority Leader McConnell have all said their next legislative priority is tax reform. If you think their repeal and replacement of Obamacare was a fiasco, you ain’t seen nothing yet.
It has been 31 years since major changes were made in the tax code. I was working for Joe Biden in the Senate in 1986 and I saw how incredibly difficult the process was and what it took to get a law passed.
Senator Bill Bradley and House Majority Leader Dick Gephardt had literally spent years crafting legislation and slowly, steadily getting support from members on both sides of the aisle. When the final bill went to the White House, President Reagan was satisfied with the compromises that had been made by both parties, and had no problem signing a revenue-neutral bill that eliminated a lot of loopholes in order to reduce overall tax rates.
The not-secret and necessary ingredient in that success was bipartisanship. This time, the leaders of the majority party have announced that tax reform will be a strictly Republican effort.
Didn’t we just see how well that worked with health care?
There are a lot of other obstacles — some involving policy, some not — that stand in the way of passage of a tax reform bill. One that doesn’t involve policy is the fact that the failure of the health care bill made the kind of tax reform Republicans have in mind much more difficult.
The health care bill included a massive tax cut for higher income individuals. Had it passed, it would have been easier to craft a tax reform bill that could be passed with a simple 50-vote majority, using what is called the rescission process.
I won’t trouble you with a long explanation of the arcane rules of the Senate, but it is doubtful the Parliamentarian would allow that process if the bill included the kind of tax cuts Republicans have talked about. Absent that approval, a reform bill would need 60 votes.
The health care debacle revealed a second non-policy obstacle that I don’t believe can or will change this fall. There may be a Republican majority, but the disagreements within that majority are fierce enough to cast doubt on any tax reform bill getting full Republican support.
If you believe Congressional leadership when they say tax reform is the number one priority this fall, you haven’t looked at the horrendous calendar members face when they return in September.
On the first day back, they must immediately deal with either passing a debt limit increase or bringing the government to a halt. There was strum und drang whenever a debt limit increase came up during the Obama years, but adding a few Republicans who did not want a government shutdown to the vast majority of Democrats who supported the President was always enough to avert disaster.
This time, a lot more Republicans will have to vote for an increase, especially if present plans to include in the overall bill payments for the Trump Wall become a reality.
If we somehow manage to get past the debt ceiling crisis, a budget must be passed before any tax reform legislation can be passed. This is required before there can be any attempt to use the rescission process.
Where does the budget process stand? Along with many others, the second ranking Republican in the Senate, John Cornyn, pronounced the budget proposal released by the Trump administration in May dead on arrival. If there have been serious efforts to bridge the gap between Congress and the President since then, they’re being kept very secret.
Just sum it all up as a shambles and don’t expect any budget at all to pass this fall.
Now that I have made the case that non-policy obstacles make tax reform a billion to one shot, let’s look at just a couple of the many, many policy obstacles that stand in the way of reform.
Everyone knows there are thousands of special interest provisions scattered like raisins throughout our tax code. Changing any one of them will involve enormous battles with one or more powerful lobbies.
But let’s deal with just the two big kahunas on the Republican wish list: lowering the tax rate on corporations and the very wealthiest individuals.
On August 1, President Trump tweeted something that was verifiably true: “Corporations have NEVER made as much money as they are making now.”
Not only are American corporations quarterly earnings up by more than double digits. They also, according to the World Economic Forum’s 2016-2017 Global Competiveness Index, rank third behind only Switzerland and Singapore in international competitiveness.
So make a case for me because I am confused. What is the pressing need for a reduction in corporate taxes?
As for individual taxes, President Trump’s plan, released in April, called for cuts in the capital gains tax, repeal of the alternative minimum tax, repeal of the estate tax, and repeal of the 3.8% surtax on high earners investment income. Just what we need to address the income inequality problem even Republicans have come to acknowledge, right?
Best estimates are that, if the Trump proposals became reality, over 50% of all tax cut benefits would go to the top 0.1 . No, not the top 1. The tenth percentile at the top of that 1%.
I’m not making this up. And again, I’d like to hear a rational argument for these kinds of tax cuts.
Someday, there should be a real bipartisan effort to reform our outdated and loophole-ridden tax code. It is desperately needed. For that to happen, we must first somehow survive this fall, this Congress, and this President. I’m not hoping for much more than that right now.
Ted Kaufman is a former U.S. senator from Delaware.

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