Tax Reform – Process Failures, Loopholes and Wealth Windfalls
5 Pages Posted: 28 Nov 2017
Date Written: November 21, 2017
This paper argues that the rushed legislative consideration of tax reform proposals without adequate time to review and analyze bill text has left open unintended loopholes. The paper identifies a loophole that would benefit multinationals in the proposals’ “repatriation holiday” provisions that if not fixed could result in large revenue losses. This loophole is illustrative of the pervasive failure in the proposals to incorporate guardrails around substantial rate reductions that would effectively police the many new boundaries between rate differences that the bill creates. Loopholes like that described in this paper are a sideshow compared to the proposals’ wealth windfall to the already wealthy from business tax rate reductions, but, incredibly, they would enhance it. Short-term political exigencies are not an excuse to adopt legislation that affords tax avoidance opportunities that will yield unintended revenue losses and undermine taxpayer faith in the tax system and their national government. Congress should slow down, hold hearings, collect comments and consider them, rather than plunging ahead with misguided legislation.
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