How tax breaks could break tax reform
Hundreds of special tax provisions for groups of all stripes litter the tax code, and clearing them out won’t be easy.
But most of the lawmakers weren’t around for the last tax overhaul, in 1986, and many longtime tax aides say they are seriously underestimating the degree of difficulty that comes with uprooting hundreds of provisions. Many predict they will have no easier time undoing loopholes that have been in the code for decades than they’ve had rolling back Obamacare.
“Oh my Lord, people come out of the woodwork,” said Dean Zerbe, a former congressional tax aide.
.. Still, even though they’re caricatured as special-interest breaks, many of the narrow provisions are for average people doing mostly average things.
.. One problem for tax reformers is that many of the biggest provisions that would go furthest towards financing a tax-code rewrite — like the deductions for mortgage interest and charitable contributions — have become all-but-untouchable.
.. On the other hand, it’s also tough for lawmakers to go after smaller ones, especially those benefiting politically popular groups, because they promise difficult fights over relatively little money. Section 107, for instance, excuses a “minister of the gospel” from paying taxes on the share of her income deemed to be a housing allowance.
.. So one trick for Republicans will be knowing which provisions are big enough to fight over, when it comes to raising cash, but not so large that they cannot be undone.
.. many predict Republicans will be forced to settle for something more narrow, like a tax cut that’s partially paid for, in order to reduce the number of losers to a more doable level.