President Trump’s announcement of his proposed tax reforms, as skeletal as it was, is better news than most commentators have suggested. First, it signals that the administration is coming to the view that tax reform is the most important agenda item for the first term — and that is great news. Second, the fact that the corporate piece of the proposal did not embrace the plan proposed by House Ways and Means Chair Kevin Brady and Speaker Paul Ryan, and its so-called border adjustment tax, is also good news. So, there is some good news in what it signals and what’s not in it. What about what is in it?
The Debate on Corporate Tax Reform Just Started for Real
President Trump’s announcement of his proposed tax reforms, as skeletal as it was, is better news than most commentators have suggested. First, it signals that the administration is coming to the view that tax reform is the most important agenda item for the first term – and that is great news. Second, the fact that the corporate piece of the proposal did not embrace the Brady-Ryan plan and its so-called border adjustment tax is also good news. The bad news is that the outlines released by the Trump administration are skinnier than most campaign proposals and don’t resemble anything like a real legislative effort. It also gets one big thing very wrong: it creates a very low rate for business income on pass-through entities. Taken together, and most importantly, the reform plan the administration has offered is fiscally irresponsible, and it relies on heroic assumptions about the economic growth that the tax cuts would trigger. The timing seems clearly motivated by the 100-day marker, and so the proposal appears to have been rushed out without thoughtful elaboration.