Better Than Either and Better Than Nothing

I tend to agree with the editors’ of the Washington Post’s ideas about the tax reform bills now in reconciliation:

The first step to a less-bad agreement would be to excise extraneous provisions tacked onto one bill or the other in order to pay off a particular lawmaker or to satisfy narrow ideological preoccupations. The Senate bill eliminates Obamacare’s individual mandate, a big step toward repealing Obamacare without any sufficient replacement policy included or promised, and it allows drilling in the precious Arctic National Wildlife Refuge. These should go. The House bill would open a gigantic campaign-cash loophole that in the name of “religious freedom” would enable people to funnel vast amounts of dark money into politics and claim a tax deduction for it. Strike that, too.

Next, bicameral negotiators should reduce the impact on the debt by scaling back the most unjustifiable giveaways to the wealthy. Rather than lowering the top individual income tax rate, they should agree to keep it at 39.6 percent, as the House bill would. Rather than accepting the House proposal to eliminate the estate tax, which applies only to very wealthy heirs, they should keep it as is — or, if they must help the idle rich, adopt the Senate’s idea to pare it back temporarily. They should accept the Senate’s plan to maintain the individual alternative minimum tax, which ensures that wealthy wage earners cannot use loopholes to entirely escape paying a fair share.

Negotiators should take up President Trump on his willingness to drop the 35 percent corporate tax rate to 22 percent, rather than the 20 percent each bill currently prescribes. Instead of spending the extra cash, they should use the savings to limit the damage GOP tax cuts would do to the nation’s already stretched budget.

Finally, negotiators should soften their blatant attacks on Democratic states and other constituencies Republicans have singled out for punishment. Instead of chopping away at the deduction for state and local taxes, which would target taxpayers in blue states, they should reduce tax breaks in a fairer way, perhaps by further limiting the home mortgage deduction. The House bill, for example, would cap the applicability of the mortgage deduction at $500,000 in loans. And negotiators should drop all of the provisions in each bill that would slam universities and their students. These provisions raise little money, serving primarily as shortsighted legislative assaults on the country’s crucial institutions of learning and innovation.

First and foremost that’s how our legislative process is supposed to work. The best parts of the bills passed by the House and Senate should make it into the final legislation. And laws should be limited to a single matter rather than the everything but the kitchen sink bills that have been normalized by the excessively partisan process that legislation has become.

Democrats should stop engaging in sophistry and come to terms with the reality that removing money from the private sector reduces private sector growth. And they need to realize that the Supreme Court victory of the Affordable Care Act was pyrrhic. Declaring the individual mandate a tax meant that putting it into a tax bill was not unreasonable.

Republicans should come to terms with the equal reality that increased debt reduces economic growth, too. I also think that Republicans will be disappointed in just how little growth reducing the personal income tax rates will produce. I’ve written about that in length so I see no reason to repeat those arguments here.

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