The White House want to pass tax reform soon, but is only starting to draft its own proposal. It will be hard.
Congress has little institutional memory of the last comprehensive tax reform (1985-86). In this Congress, only 11 House members and 13 senators were serving during the passage of that bill.
At this point in the last reform, a full draft of the administration proposal had been on the table for more than four months. The current effort is far behind schedule.
Congress has less staff capacity than it did in the 1980s. And the administration is late in staffing key tax jobs.
The last tax reform took millions of low-income Americans off the income tax rolls. In part because of that law, about 45 percent of households pay not federal income tax. Accordingly, the issue really has no populist appeal, since direct benefits of tax reform will flow to more affluent Americans.
Many tax reformers say that we should cut or abolish corporate income taxes. There is a very solid economic argument for doing so. (The taxes arguably make US businesses less competitive, and the cost ultimately falls on consumers and workers.). But according to Pew, the top tax complaint of ordinary Americans is that some corporations do not pay their fair share. In other words, the people want corporations to pay more tax, not less.
In the 1980s, opponents of tax reform did not effectively organize. Three decades later, the interest group community has become far more adept at coalition lobbying. The pushback will be much stronger this time. . In Showdown at Gucci Gulch, Jeffrey H. Birnbaum and Alan S. Murray quote Reagan aide Richard Darman saying: “I couldn’t help thinking that if I were a lobbyist, I would stand in the hallway with a big sign saying EVERYONE INTERESTED IN KILLING THIS BILL, PLEASE MEET IN THE NEXT CORRIDOR … There would have been an enormous rush, and they would have seen the power of their collective action.” Twenty-eight years later, all the lobbyists have read that book, and they know how to build coalitions.
