It’s Been 31 Years Since the Last Tax Overhaul. Here’s Why.
President Donald Trump has promised the most comprehensive overhaul of the tax system since 1986. That was when a Republican president joined forces with a Democratic House of Representatives and a Republican Senate to lower personal income-tax rates and simplify a messy and outdated tax system.
Today, Republicans control both houses of Congress as well as the White House. Democrats agree with them that the system has once again become messy and outdated. So in theory it should be easier to reach agreement now than it was then.
Forget that theory. Passing tax reform this year will be a much tougher slog than it was 30 years ago, or than Republicans expect it to be today.
Republican opposition would have doomed President Ronald Reagan’s plans without Democratic support, and the bipartisanship and skilled political leadership needed to push them through don’t exist today.
Thus while a sweeping tax-reform bill is a top priority of both Trump and House Speaker Paul Ryan, with a goal of passing it by July, the odds are that it won’t happen.
Today, that spirit of horse-trading is gone. Many Republicans are dead-set against raising any taxes, even if needed to offset cuts elsewhere. Some Democrats are unbending on reducing high U.S. corporate tax rates despite widespread agreement that they are counterproductive. It’s hard to see why either side would give ground.
The probability of passing a major Tax Reform Bill is looking more unlikely, especially with growing disinclination in Republican circles of the Border Adjustment Tax. You have to make up tax cuts somewhere. This is before adding the wall and increasing military spending - those alone demand much more revenue.