Both Houses of Congress have now passed tax bills, and GOP lawmakers will over the next couple of weeks try to reconcile the two versions. Neither is an improvement over the status quo, and we’d be delighted if the conference collapsed and everyone agreed to start from scratch to craft a bipartisan, fiscally responsible bill. Still, that’s not likely – and there are worse and worser possible outcomes from a conference agreement.
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 Donald 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.
Even if House-Senate negotiators took every one of these recommendations, the product would still be an expensive tax cut bill that a country in the midst of an accelerating economic recovery does not need and, over the long term, cannot afford. But the consequences would be less extreme.
The Washington Post