Since the 1970s, Republicans have successfully turned the United States into an antitax country. Voters and the public are wary of any new levy, largely believe that any tax cut is by definition good, and don't trust the government to wisely spend what taxes it does collect. Nowhere has this been more successful than in the transformation of the estate tax into the so-called death tax. The estate tax now faces near certain extinction even though almost no one pays it, and very few even face the prospect of paying it.
Tax Analysts Blog
The Tax Council Policy Institute’s 2017 symposium was aptly titled “Tax Policy in Transition: Diverging Views in a Converging World.” The organizers presented a star-studded cast of tax policy experts from business, government, and policy think tanks. Panelists with deep expertise shared valuable insights as they discussed the merits of various approaches to business taxation, paying particular attention to the “Better Way” House GOP blueprint for tax reform released last summer.
Valentine’s day notwithstanding, this week was short on any love for tax reform. It began with visitors from the Great White North. Canadian Prime Minister Justin Trudeau had a sit down with President Trump at the White House. The two leaders talked about cross-border trade and Trump’s desire to “tweak” NAFTA. They didn’t specifically discuss tax reform, but members of Trudeau’s cabinet held meetings with their U.S. counterparts and voiced displeasure with the House GOP tax reform blueprint, specifically the border adjustment. Not a surprise considering much of Canada’s economy depends on trade with the United States.
Carbon taxes are toxic, at least to most Republicans. But last week, a handful of GOP wise men, including several former Treasury secretaries, offered a challenge to party orthodoxy. Their plan? To impose a new carbon tax but refund the money to taxpayers before politicians get a chance to spend it.
Since the election of President Trump, Washington has been buzzing with talk of tax reform. Yet surprisingly little attention has been paid to the effect federal tax reform might have on state tax systems across the country. Because most state, individual, and corporate income tax systems rely heavily on federal rules, definitions, and calculations, what happens with federal tax reform has broad ramifications on state taxation.
To say that House Speaker Paul Ryan is jazzed about tax reform legislation is an understatement. During his recent television interview on the PBS NewsHour, Ryan’s expression changed markedly once the subject matter shifted from President Trump’s tweeting habits to rewriting the Internal Revenue Code. The mention of the House’s “Better Way” tax reform blueprint produced a smile reminiscent of a kid in a candy store.
President Trump is in favor of the House's destination-based cash flow tax. Or at least that's what The New York Times made readers think after the president spoke to Republicans in Philadelphia. But the truth is much more complicated than that, and Trump has yet to mention the House plan since he told The Wall Street Journal that he found it "too complicated".
Many of the same people who underestimated Donald Trump’s political skills on the campaign trail are now overestimating his policy sophistication in the White House. Or at least the specificity of his policy agenda. This tendency was on full display last week around the subject of “border taxes.” The root of the problem seems to be this “border” word. Since it’s associated with more than one policy proposal, it’s made for a lot of (possibly deliberate) confusion.
One thing I learned in nearly 30 years of practicing law in the Tax Division of the Department of Justice is that attorneys check their politics at the door. Our job was to defend the full and fair administration of the tax laws, period. As a result, liberal democrats and conservative republicans advocated in courts around the country on behalf of the United States of America, without regard to their personal views or the political party that controlled the White House. That has been the prevailing attitude of career attorneys and political appointees in the Tax Division for more than 30 years. And I’d like to think it will remain that way.
The House Republican blueprint has received surprisingly positive reviews from many economists and tax observers. In one bold stroke, the destination-based cash flow tax could eliminate the aspects of the tax code that encourage businesses to locate jobs overseas. It could be a powerful engine for domestic job creation and economic growth. All that being said, however, it's time for House Speaker Paul Ryan and Ways and Means Chair Kevin Brady to accept that the tax will almost certainly never become law.