As the Republican tax bill lurches toward enactment, many of its major features remain in flux. We still do not know the future corporate tax rate, the extent of tax relief for partnerships and other pass-through entities, the details of the international tax changes, and so on. But, as I wrote in “A Tale of Two Tax Plans” (July/August 2017), the central tension underlying the tax overhaul has been apparent for some time. That tension is between the reform’s clear immediate effects and its speculative long-term consequences.
[Read “A Tale of Two Tax Plans” here.]
First, consider tax revenue. The reform’s immediate effect is a large loss in revenue that experts believe will increase the national debt by about $1.4 trillion over the next decade. Without legislative gimmicks such as the sunset of individual tax cuts in 2026 (something no one in Washington expects to happen), the revenue cost is
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