Tax Plan Aims to Slay a Reagan Target: The Government Beast

The following article by Eduardo Porter was posted on the New York Times website December 5, 2017:

President Ronald Reagan, with a replica of a federal income tax form, promoting his tax legislation in New Jersey in 1985. Credit Scott Stewart/Associated Press

It was the spring of 1985 when President Ronald Reagan first proposed to put an end to the state and local tax deduction. The idea was, to be sure, politically tricky. The provision had been around since the creation of the federal income tax in 1913, the budgetary expression of America’s celebrated federalism. As Justice Louis Brandeis might have put it, it was the federal government’s way to help pay for policy experimentation in the nation’s “laboratories of democracy.”

And yet to a Republican Party embroiled in a fundamental debate on how to shrink the government, it was an idea hard to resist: a direct shot at states’ capacity to spend. Bruce Bartlett, then a conservative tax expert who would go on to serve under Reagan and his successor, George Bush, estimated that without federal deductibility, state and local spending would fall 14 percent.

Nixing deductibility “threatens the political livelihood of spendthrift lawmakers across the nation,” Mr. Bartlett exulted at the time in an article for the Heritage Foundation. And it “would become more difficult for states to finance programs of doubtful benefit to their taxpayers by ‘hiding’ the full cost within the federal tax system.” Continue reading “Tax Plan Aims to Slay a Reagan Target: The Government Beast”

Republicans May Use Cuts in Entitlement Programs to Reduce Deficit

The following article by Alan Rappaport was posted on the New York Times website November 15, 2017:

© Greg Nash

WASHINGTON — Republican lawmakers have largely dismissed concerns about how their $1.5 trillion tax cut would add to the federal deficit. Now, some Democrats are warning that the tax rewrite would ultimately be financed by gutting entitlement programs like Social Security and Medicare.

The possibility of cuts to safety net programs appeared more likely on Tuesday, as the Congressional Budget Office warned that the tax bill could set off an arcane budget rule that would make deep cuts to Medicare over the next decade.

Republican lawmakers have turned a blind eye to the effect of the tax bill on the deficit, saying the tax cuts would essentially pay for themselves through increased economic growth. Continue reading “Republicans May Use Cuts in Entitlement Programs to Reduce Deficit”