Tax Reform: There’s Change and There’s Reform, They’re Not the Same

Tax Reform has been a political topic, well, since the before we were the United States of America. It is therefore not surprising that it was an issue in the 2016 election. Perhaps not a highly debated topic, or even frequently discussed, and certainly not a topic explained or assessed during the campaigns; but as always “promises” were made. The “promises” were that taxes would be cut and the code simplified, that they would be made “fair”.

Now the election is over and with a Republican Congress and Administration delivering on the “promises” should be more feasible than for its been in a while. Of course, making the promises isn’t the same as fulfilling them. But to make matters far more difficult, keeping the promises means more than just having an answer. It requires that the answer that you have is an appropriate, effective and productive solution to the problem; and that requires that you understand the problem and not what you think the problem is. So, it is with Tax Reform and its implied problem with taxes.

Let’s start with the issue that our tax system is ‘unfair’. If the President and Congress are going to make them ‘fair’ or at least ‘more fair’ then understanding what makes them ‘unfair’ would be an essential requirement. How else would you be able to know that your solution fixes the problem if you can’t define the problem and can demonstrate how your “Reform” fixes it both in theory and ultimately in fact?

If the President and the Republican Congress have a plan then what are the answers to the following “Unfairness” questions? If the Democrats in Congress have a different plan (i.e., answer to Tax Reform) then what are their answers to the “Unfairness” questions?

The “Unfairness” questions:

Why is the current system ‘unfair’?

1. Is it ‘unfair’ to everyone, and ‘unfair’ in the same way to everyone; or does the ‘unfairness’ vary by different categories of people/entities?
   
• If the ‘unfairness’ isn’t the ame for everyone, who is it more ‘unfair’ for and why?
  
• Conversely, if not ‘unfair’ equally for everyone, who is it ‘more fair’ for and why?
  
2. What change under the proposed reform creates a more ‘fair’ tax system?
   
• Why is this more ‘fair’ than the current tax system?
  
• Does this new tax policy generate more, less or the same tax revenues than the current system, if the taxable incomes for everyone were to stay the same as it will be for 2016 taxable incomes?