Every Congress has to learn the lesson: Cutting income tax rates is easy; expanding the tax base is difficult. Every tax break has beneficiaries who claim they can't live without it.
Legislators seeking ways to limit the cost of President Trump's tax plan realize that citizens regard deductions for mortgage interest and charitable gifts as inalienable rights.
Could SALT, the deduction for state and local taxes, be a candidate for elimination? Nope. Republicans from high-tax states wouldn't hear of it.
Next trial balloon: a suggestion that the annual limit for contributions to 401(k) plans be cut from $18,000 to $2,400. Pop! After widespread criticism, that idea has suffered
death by tweet.
Back in the Reagan years, cutting tax rates was relatively
quick and easy. Cutting rates
and broadening the tax base in the 1986 tax reform act was not.
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2 comments:
Those limits on 401(k)s were laughably stupid. Republicans would have to be truly brainless to seriously suggest them.
But they will very likely eliminate the stretch IRA treatment for inherited IRAs.
Notice that they are not even talking about going after the big money--taxing muni bond income and the big endowments. Neither of those would harm the middle class. The subject should at least be on the table.
Republicans got slapped down merely for trying to eliminate the SALT deduction. Imagine what would happen if they attempted to tax income from municipal bonds. It would be the bloodiest Halloween horror movie of all time.
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