Question

What changes of the Tax Cuts and Jobs Act ("TCJA") do you NOT agree with and what would you suggest Congress do to fix it ?

Answer 1

Although it improved the tax code in some ways, TCJA will (a) have minimal impact on long-term growth; (b) increase disparities in after-tax income by giving the largest relative and absolute tax cuts to high-income households; (c) make most households worse off after taking into account plausible ways of financing the tax cut; (d) make the government’s troublesome long-term fiscal status even worse; (e) make the tax system more complex and more uncertain; (f) make it harder for policymakers to fight future recessions; (g) reduce health insurance coverage, raise health insurance prices, and (h) reduce charitable giving.

Repeal the individual rate cuts and the pass-through provisions (or let them expire as scheduled in 2025). Revisit the international rules. Raise the corporate rate to the 25-28 percent range, and institute full expensing. Enact a carbon tax. Close capital gains loopholes. And increase the budget for IRS enforcement to deal with a jaw-dropping tax gap that is now approaching $600 billion per year.

More generally, the nation faces a host of problems that will require added spending, addressing the debt, and new tax policies. TCJA takes away funds that could support those activities; thus, the problems it creates extend far beyond the narrow realm of tax policy.