Any major tax bill has unintended consequences and hidden loopholes. But the current Republican tax effort just bristles with such potential miscues. It’s a slipshod product, legislated with minimal transparency and analysis and with a premium on partisan politics.
The Senate is slated to vote this week on a tax bill that’s similar to the one the House passed on Nov. 16. Both call for huge tax cuts, primarily for corporations and upper-income individuals, with little, sometimes nothing, for many middle-class taxpayers. Both parade as tax reform, but do little to reorganize the tax system as the last real tax reform did in a bipartisan measure passed in 1986.
The legislation has been rushed so fast through a short-circuited lawmaking process that if it’s successful, many of the politicians who voted for it may find themselves shocked to discover what they’ve done.
Over the summer, Republican leaders brushed aside Sen. John McCain’s call for “regular order” to consider what soon became a failed effort to repeal the Affordable Care Act. Regular order involves dozens of hearings where different views can be ventilated, along with deep analysis in a bipartisan spirit.
Politically motivated haste has now produced an equally reckless tax effort.
On a macro level, it’s not going to produce the promised economic growth. It can be expected to add at least $1.7 trillion to the deficit in 10 years and worsen income inequality.
It’s no surprise the House legislated on a partisan basis; that’s long been the way it does business. But the Senate ought to be a different story. Sen. Orrin Hatch, who leads the Finance Committee, could have tried to work with Sen. Ron Wyden, the panel’s senior Democrat who was amenable to a bipartisan tax-reform deal. Instead, the seven-term Utah lawmaker, under pressure to retire next year, went small, expensive and partisan.
Stephen Shay, a Harvard University law school lecturer, tax lawyer and former Treasury official, has predicted that the rushed legislation “will be rife with undiscovered loopholes that increase the windfalls and scope of the deficit.” The Finance Committee did hold an Oct. 3 hearing, he noted, but it lacked substance and was “irrelevant except to permit the committee majority to say a hearing was held.”