Associate Dean for Academic Affairs Linda Sugin and Visiting Professor Rebecca Kysar penned an op-ed for the New York Times about the GOP’s tax bill.
Republicans are on the verge of achieving their decades-long goal: an overhaul of the tax code. But the system they have built will not last.
The plan’s instability is partly a result of the process Republican Party leaders chose to make it happen. Reconciliation, which allows escape from the Senate filibuster, means that Republicans did not have to reach across the aisle. Not a single Democrat supported the legislation.
This choice has consequences. For one, the exclusion of Democrats means that there is no buy-in from the minority party that will one day, perhaps soon, be in the majority again. This dynamic is worsened by the fact that the tax legislation pits blue states against red through the limitation of the state and local tax deductions. In the end, Republicans have chosen policies that are more extreme than they would have if they had worked with Democrats.
The deficit-increasing bill that resulted tilts heavily toward the very rich, financing tax cuts on the backs of future generations. These policies not only face the risk of being undone by a future Democratic majority, but also could indeed prove to be so lopsided as to alienate the more centrist of Republicans. Worse, Republicans now aim to take advantage of the instability they’ve created by cutting so-called entitlements like Medicare down the line, burdening the poor and the middle class.
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The tax bill will also prove precarious simply because of poor policy choices. The deduction for pass-through income is policy incoherence at its worst, lacking any justification and favoring certain industries over others. By taxing wage income and business income differently, the bill also opens up a bevy of opportunities for the well advised to game the system, which will cost the government revenue and sow distrust of the tax system, even of government itself.
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In promoting their tax plan, Republicans allude to the famous revenue-neutral Tax Reform Act of 1986 as their role model, describing the new legislation as a comparable crown jewel in achievement. The 1986 act lowered rates on individuals and paid for them by eliminating special tax breaks and tax shelters that had been used by the rich. In stark contrast, the current tax bill eliminates few tax breaks while opening up a new world of shelters.
