Following Obamacare Repeal Failures, It’s Time to Try Bipartisan Tax Reform

“If we want to secure moderate, sustainable, and fiscally healthy tax reform, the GOP won’t be able to do it on its own.”

Obamacare most likely won’t be repealed this year. Both repeal and replace, and simple repeal have failed. With Obamacare, Republicans tried to go it alone, failing to reach out to Democrats to forge a bipartisan solution. When consensus couldn’t be built among Republicans themselves, however, repeal efforts collapsed as some GOP senators broke rank. Now, President Trump is urging tax overhauls by the end of the year.

Can Republicans rework the tax code on their own? If Obamacare reform efforts were any indicator, the answer is no. Some Republicans will be looking to slash taxes tremendously, especially on the wealthy. Flat tax ideas might also be floated. Yet, it’s fair to question if the United States can afford such dramatic overhauls. Already, America is running massive deficits, and tax cuts without first implementing spending cuts will simply pile more debt onto an already financially strained country.

Many moderate Republicans may not be willing to accept this. Democrats, meanwhile, almost certainly won’t. Moderate Republicans might push for more moderate tax reforms. Smaller tax cuts coupled with moderate spending cuts. But will more hard-lined GOP’ers agree to such a plan? Again, if Obamacare offered any insights, the answer is no.

Many moderate Republicans were ready to repeal Obamacare, but they wanted a moderate replacement bill in its place. This bill would have still extended coverage to many of those in need, but would have been more fiscally affordable. For hard-lined Republicans, that was simply unacceptable because too much “government” would have been spared the cutting board.

With moderate and hard-lined Republicans unable to agree upon a replacement plan, Obamacare repeal faltered. If the GOP pushes tax reform alone, the same will likely happen again. It’s possible, however, that moderate Republicans and moderate Democrats could come together to pass moderate, sustainable, and fiscally wise tax reform.

The fact is, the United States has one of the most convoluted tax codes in the world. In few other countries are armies of lawyers and accountants necessary to navigate the tax system. In the United States, those wealthy companies that are able to afford such “armies” are often able to lower their effective tax rates to 15% or less. In these instances, America’s tax rates are much more competitive and even lower than European and Asian tax rates.

On the other hand, with the United States top tax rate set at 39.1%, we have some of the highest official corporate taxes in the world. While big companies are usually able to avoid this burden, smaller all-American companies often can’t. Reworking the tax code to be friendlier to small businesses should be a priority.

At the same time, the United States has big bills to pay. Public debt now exceeds the gross domestic product. Future obligations are even heftier. America’s military budget now tops $600 billion and Trump wants to expand it. Our national infrastructure is slowly starting to crumble and rust away. Future Medicare and Social Security costs greatly exceed current revenues.

Many countries are investing in renewable energy sources so that they can decouple from oil for both environmental and geopolitical reasons. Creating more localized, self-sustaining energy sources will be necessary if the United States wants to protect itself from geopolitical threats.

While Congress and the Trump administration should pursue tax reform, we must also be conscious of our obligations. We can’t have our cake and eat it too. We will have to find a way to balance between making a more globally competitive tax code while also meeting our financial obligations.

Continuing to push debts off onto future generations is unfair for them, and will only lead to more present-day instability. At the same time, without tax reform, we risk stifling innovation and local investments.

If we want to secure moderate, sustainable, and fiscally healthy tax reform, the GOP won’t be able to do it on its own. However, together, moderate Republicans and moderate Democrats may be able to forge a new tax policy that is fiscally sustainable and favorable to small businesses, innovation, and economic progress in general.

Brian Brinker

Brian Brinker is an OpsLens Contributor and political consultant. Brinker has an M.A in Global Affairs from American University.

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