Welcome! Login | Register

Man Burglarizes Home, Sexually Assaults Woman in Northeast Portland—Man Burglarizes Home, Sexually Assaults Woman in Northeast…

Portland Ranked Among Best Big Cities to Live in—Portland Ranked Among Best Big Cities to Live…

Weiss: House Budget Committee Plan Calls for Privatization of Medicare—Weiss: House Budget Committee Plan Calls for Privatization…

Sunday Political Brunch: The Senate Scramble - July 23, 2017—Sunday Political Brunch: The Senate Scramble - July…

Two Types Of “Breaking News” Trades—Two Types Of “Breaking News” Trades

Fit for Life: The Cycle of Life—Fit for Life: The Cycle of Life

Fecteau: The Dumb & Dumber Approach to Healthcare—Fecteau: The Dumb & Dumber Approach to Healthcare

What To Take From The 2017 NBA Summer League—What To Take From The 2017 NBA Summer…

Weiss: Social Security, Medicare Are Solvent..For Now—Weiss: Social Security, Medicare Are Solvent..For Now

Sunday Political Brunch: What is the Real Russian Connection?—July 16, 2017—Sunday Political Brunch: What is the Real Russian…


Fecteau: Will Trump’s Tax Reform Plan be Another Epic Fail?

Wednesday, March 29, 2017


Despite all the promises during the campaign trail, President Donald J. Trump failed to repeal and replace the Affordable Care Act (AKA ObamaCare). It was a stunning failure for the self-proclaimed “expert negotiator” who literally wrote the book on making deals. 

Even though Republicans control Congress, their health-care bill could not amass enough support to become law, and House Speaker Paul Ryan pulled it before there could be an embarrassing repudiation on the house floor. This was a staggering defeat, and an epic fail for the Republican Party. Trump now says he will focus on tax reform (at least at this moment), but faces significant obstacles. 

Trump’s modus operandi in the private sector was simply to use intimidation and strong-arm tactics to make deals, but that is not how the game is played in Washington D.C. Congress is a co-equal branch of government, and if it wants to block the President, Trump’s threats are meaningless. Trump told wavering Republican to support his health care reform or there will be dire consequences. That threat was ignored. 

Trump tried to blame Democrats for this health care defeat, but the reality is much more complex. Trump didn’t have the mandate his predecessor had. Trump didn’t even win the popular vote, nor did the GOP speak with one cogent voice. There are many voices in their party, including unbending ideologues that merely dubbed his proposal ObamaCare lite. Those hardliners, who are mostly concentrated in the Freedom Caucus, have now shown they are willing to stand up to the President. 

Even past successes show maintaining those reforms will be difficult. The most significant tax reform was introduced in 1986 by President Ronald Reagan. This was lauded as a victory for tax reform advocates, a simplified, easy to understand tax code. It lowered tax rates, but also eliminated loopholes to pay for those rates. Reagan worked with both Republicans and Democrats to get this historic bill signed into law. This was considered a scarce moment of bipartisan cooperation that seems almost impossible today. 

However, this was merely a short-term, rare two-party victory. This is the political equivalent of calling the maiden voyage of the Titanic a success story. Even after Reagan’s tax reform, our tax system became ever more byzantine with the pervasive influence of lobbyists, and special and corporate interests. These respective interests carved special perks in the tax code far more generous than even before the tax reform legislation. One example is what is known as tax inversion where companies simply relocated overseas through mergers, avoiding taxes in the process. 

This does not bode well for Trump’s tax reform plan. The complexity of the tax code already favors the haves over the have-nots. Take for instance, the corporate tax rate, critics properly point out that the statutory corporate is highest in the world – correct. But the average effective corporate tax rate drops considerably, relatively insignificant compared to the global average. Also, some companies such as GE received billions in refunds. For all the talk of a simplified tax system, the status quo likes the system the way it is now. In fact, the average effective corporate tax rate is far more competitive compared to other tax rates in the world. 

Political reality is catching up with President Trump. His failed health care reform efforts are simply a precursor to his failure to pass substantive tax reform. Trump considers himself a skilled negotiator, but even he is coming to understand our government isn’t a business, and there are intractable influences that make change more difficult to implement; no matter the skill of the negotiator.  

Matt Fecteau ([email protected])  is a former White House national security intern and Iraq War veteran. Follow him on Twitter @MatthewFecteau


Related Articles


Enjoy this post? Share it with others.



Stay Connected — Free
Daily Email