For today, looking at the bill generally, it’s bad for America: it’s a sham reform instead of a beneficial restructuring, and it makes this country’s outlook worse.
Benjamin H. Harris and Adam Looney, in their white paper The Tax Cuts and Jobs Act: A Missed Opportunity to Establish a Sustainable Tax Code, detail the dual deficiencies of the Trump bill (it’s sham reform and it makes matters worse):
The Tax Cuts and Jobs Act of 2017 leaves many promises of tax reform unfulfilled. In this paper, we examine the plan’s prospects to boost future growth, and discuss fundamental reforms that would boost the stock of capital and generate sustained, long-term growth. After making the case that the current tax code is unsustainable and that reform will be revisited, we recommend a series of strategies for future Congresses, including limiting windfall tax breaks on already-committed capital, providing targeted tax cuts on wages to boost labor supply, reducing the most harmful tax distortions, and administering the tax code more effectively.
The Tax Cuts and Jobs Act of 2017 (TCJA) leaves many promises of tax reform unfulfilled. The bill’s cost sets revenues far-below projected spending levels, and puts deficits and debt on an unsustainable trajectory. Many provisions are temporary and expire, require clarification in regulation, or may not survive court challenges from our trading partners—creating uncertainty for individuals and businesses and punting hard choices to future policymakers. While the bill provides temporary economic stimulus, it delivers only a meager boost to long-term economic growth, and even less for Americans’ future living standards. And it fails to achieve other goals of tax reform by making the tax system more complicated and more difficult to administer, and creating new opportunities for avoidance or noncompliance. These shortcomings, coupled with voters’ expressed dissatisfaction with the legislation, seem likely to drive efforts to repeal and replace it.
Fortunately, the tax system is fixable. In the 1980s, an ill-conceived deficit-burgeoning tax cut in 1981 was quickly revised in subsequent years, culminating in comprehensive reform in 1986. America would benefit if history repeated itself—and soon. When the time comes to revisit tax reform, policymakers will have the opportunity to install a tax code that is pro-growth, simpler, sustainable, and more equitable.
When Congress takes up another tax bill, a lasting and beneficial reform will include several ingredients. As a starting point, the most important function of the tax system is to raise revenue to pay for the spending Congress has authorized and that Americans expect. Hence, one objective of reform is to set federal tax revenues on a sustainable path. Given commitments to popular social programs and shifting demographics, and today’s strong economic situation, stabilizing the debt over the next 30 years would require revenues close to 21 percent of GDP (Auerbach, Gale, and Krupkin 2018).
The full paper is embedded at the bottom of this post. This isn’t a libertarian analysis, of course: setting revenues on a sustainable path would be easier if one set expenditures on a downward path. And yet, for it all, this is a reasonable and possible path (although not, to my mind, ideal).
By contrast, the Trump plan is junk economics. (Lightning would more probably strike the same place a hundred times than Trump would make his way through a white paper on tax policy even once.)
A consideration of particulars awaits, yet this much is now obvious to any reasonable person: a tax policy that hobbles America will never boost Whitewater.
Previously: About that Trump Tax Plan, On the Whitewater CDA’s Press Release (A Picture Reply Is Worth a Thousand Words, A Candid Admission from the Whitewater CDA, and More About that Trump Tax Bill.