A History of Failure: The True Difficulty of Tax Reform

Having failed to repeal and replace Obamacare, congressional Republicans have turned their attention to tax reform. Given the disappointing track record of the 115th Congress, a victory on taxes is a political must-win. However, the history of tax reform is mostly one of failure and suggests that the GOP has its work cut out for it.Tax reform is different from tax cutting. Granted, any tax reform package is going to include a whole host of cuts, but there is more to it than that. Tax reform is also an effort to purge the tax code of wasteful, unfair, complicated, or counterproductive exemptions, allowances, or refunds. That means that some people will see tax increases.If tax reform is deficit neutral, i.e., it neither adds to nor subtracts from the national debt, the benefits for the winners will be equal to the costs for the losers. Collectively speaking, deficit-neutral tax reform can still be a net benefit to society, as a simpler and more efficient tax code increases productivity and thus growth. The challenge, however, is overcoming the objections of the individual factions that are going to see their tax bills increased. History suggests just how difficult a task this is.