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Have Republican Tax Writers Lost the Plot on Tax Reform?

House Ways & Means Committee Chairman Kevin Brady says he plans to release his detailed tax reform legislation on November 1.

It’s not fair to judge a tax reform plan that hasn’t been released yet, but our overall excitement is tempered by a number of concerns.

What could possibly temper our enthusiasm for a 20 percent corporate income tax rate? Yes, it’s true that a rate that low covers a multitude of sins. But it’s very easy to lose track of the core intent of tax reform when negotiating with various interested parties and trying to minimize revenue losses with “pay fors.”

And what should be the core intent of tax reform? Increasing private sector investment, because that’s what drives economic growth, as we have argued for decades.

A lower corporate rate should, in itself, encourage higher levels of investment. But it’s possible that other provisions in the tax reform could actually work to oppose investment and reduce the impact of the lower corporate rate.

So what happens when a tax reform plan ends up containing elements that actually discourage investment? It tells you that the people writing the plan have lost the plot. And how will we know if they have lost the plot?

Unfortunately, all of these elements are reportedly in discussion as part of the soon-to-be-released plan. Hopefully, the tax writers haven’t lost the plot on tax reform.