Will tax reform necessarily contribute to economic growth? It’s tempting to answer with a resounding yes, but the better response is more cautious. The outcome depends on the details, suggesting that stakeholders would do well to manage their expectations.
Tax Analysts Blog
The typical U.S. citizen is rightfully concerned about how much tax they pay, but their interest in the details of the tax code extends only so far. Broach the intricacies of transfer pricing and most people’s eyes immediately glaze over. This presents a challenge to proponents of tax reform legislation.
Steve Bannon wants to soak the rich – or at least leave them a little bit damp. According to Axios, Bannon wants to use tax hikes on the rich to pay for tax cuts for the middle and working class. Apparently, President Trump’s chief political strategist believes such a move would be a “potent populist idea.”
French President Emmanuel Macron has radically reshaped the politics of his country in many ways. He crushed the Socialist Party candidate in the first round of the presidential elections, going on to easily defeat the National Front’s Marine Le Pen in the second round. And his new party secured an outright majority in Parliament, relegating the Socialists to a small minority, while the right-leaning Republican Party (the old Gaullists) saw their representation nearly slashed in half. But on economic and tax policy, Macron is far less of a revolutionary.
The great supply-side experiment is over. After years of cratering revenues and hard choices about spending cuts, the Republican-controlled Legislature has pulled the plug on Republican Gov. Sam Brownback’s 2012 tax program. Both the Kansas House and Senate overrode Brownback’s veto June 6 by wide majorities. Already commentators are rushing to declare all tax cuts obsolete as a result of Kansas’s experience, but that would be a gross overreaction to what actually happened.
The federal gas tax turns 85 today – pretty respectable for an excise but nothing compared with federal levies on alcohol and tobacco, which first appeared in 1789.
The Congressional Budget Office released its updated analysis of the American Health Care Act (AHCA), giving Democrats new ammunition to attack the bill and making some Republicans even more nervous about the consequences of healthcare reform in the 2018 midterm elections. But given what the CBO said about the bill, it’s clear that very little has changed since the first report in March.
For most of the year, Republicans have said that passing healthcare reform and presidential involvement in the process could make tax reform much easier. In the last two weeks, President Trump released a tax plan and the House passed a repeal-and-replace bill by a narrow margin. Unfortunately, it’s not all that clear that either of these events will actually help the GOP accomplish anything on taxes.
As the House Republican blueprint's destination-based cash flow tax comes under increasing attack from retailers and opponents, the GOP and other would-be tax reformers are looking at other options. And it probably shouldn't be shocking that a federal VAT is among the choices to potentially replace the corporate tax in any major tax reform effort.
Taxpaying is a civic ritual. The annual ceremony -- gathering records, completing returns, rushing to the post office -- has been diluted in recent years, especially by the rise of electronic filing. But April 15 remains a national anti-holiday of sorts. It may not be fun, but it's a touchstone of American citizenship.