After retaking the House of Representatives, Congressional GOP leaders beat a consistent drum for fundamentally reforming our tax system, an elusive goal since the historic 1986 tax reforms.
Should this year-end, must-pass CROmnibus bill pass, it will bring with it a few nails in the coffin of tax reform, at least in the near term.
As The Washington Post reports:
The whole theory behind the yearly crisis of “tax extenders” is this: By constantly having to pass extensions of current policy under Congress’s Pay-as-You-Go (PayGo) budget rules, it is a natural incentive for tax reform.
This is because extending current law, under PayGo, “costs” in a budgetary sense. Of course it doesn’t cost the government to let people keep more of their own money, but the budget scheme assumes the revenue, and it has to (in theory) be offset by either spending reductions or tax increases.
Yes, certainty for businesses and individuals, economically, is a good thing. But by making a handful of these tax extenders “permanent” the GOP has weakened its hand in negotiating not only for tax reform, but in future budget battles in the short term. To be cynical, all of these provisions are pawns for horse trading, and they were just sacrificed. Tax reform as the biggest loser of this deal.
