Fall
has arrived and this means it’s time for another round of federal tax
legislation. This time, our political
leaders in Washington tell us it’ll be a tax reform one.
Some
of us will don blinders and earplugs sparing us of all the tax reform facts,
figures and rhetoric coming from our favorite media sources.
Tax
reform is a nice soundbite offering a perceived something for everyone. For those at the bottom of the economic totem
pole, hopefully, it’ll tax rich folks and corporations not paying their fair
share.
For
those at the top, maybe it’ll correct a perceived flaw of using our tax system for
other than assessing a tax on income earned.
Like, for example, giving earned income and other welfare-like tax credits
putting taxpayer monies in the hands of those who’ve not earned it.
Our
political leaders like giving us tax reform and tax relief and they do it
often. In the last 60 years, we’ve had at
least 20 rounds of federal tax legislation promising more tax reform and
relief. Three times, what was enacted
can best be described as tax reform.
In
1954, we had the enormous and reform-minded 875-page Internal Revenue Code of
1954. It was the first comprehensive
revision of our federal income tax system since its origin over 40 years
earlier in 1913. This first round of tax
reform legislation, considered by some to be the most monumental overhaul of
our federal tax system because it changed over 3,000 tax laws.
Fifteen
years later was a second round of tax reform, the Tax Reform Act of 1969. It made major changes to the 1954 tax laws.
Seventeen
years later, we had President Reagan’s Tax Reform Act of 1986. Some commentators described it as the most
complex tax reform ever because it required over 180 follow-up technical
corrections.
Since
then, 31 years later, we’ve had another 17 rounds of federal tax legislation
giving us more tax relief but none having the “reform” word in their titles. This means we’ve not had any tax reform for
over three decades because legislation can’t be tax reform unless it has the
reform word in its title, right?
History
tells us we need tax reform legislation every so often to fix abuses created from
previous tax relief legislation. Politically,
for best results, it’s something meant to be rinsed, washed and repeated.
Last
year when campaigning for President, we learned of then candidate Donald
Trump’s tax law proposals, theme-based tax reforms that supposedly would make America
great again. Who wouldn’t want this? Not me, and probably not you.
As
Congress now prepares for 2017 tax reform legislation, the devil will be in the
details advocated by a brigade of special interests, all hoping to benefit from
federal tax reform legislation. One
thing is certain, it takes more than the “reform” word in the title of federal tax
reform legislation to deliver meaningful and real tax reform.
President
Trump learned a valuable lesson earlier this year from the failed attempt to repeal
and replace the Affordable Care Act, so he’s now courting Democratic support that’ll
be necessary for bipartisan tax reform. Meanwhile,
Congressional Democrats have stipulated certain prerequisites needed for bipartisan
tax reform. Great odds exist even though
their dating has just begun.
A
pig wearing lipstick is still a pig. Reforming
abusive and complex tax laws takes more than legislation having the reform word
in its title.
What’ll
it be, this upcoming federal tax reform our political leaders will give us?
More
pages to the about 3,000-page Internal Revenue Code with new complicated laws ridden with loopholes providing tax relief to
some but, real tax reform it’ll not be.
Pax Domini sit semper vobiscum