March 27, 2013

We’re now one month out from the House Republican announcement that they were reserving H.R. 1 for comprehensive tax reform. So far, H.R. 1 is still empty, waiting for action.

That may last for a long time. My bet? There will be no scoreable, revenue-neutral comprehensive tax reform.

The most likely scenario is that there won’t even be a bill. Just as the mythical “repeal and replace” did in the previous Congress, tax reform gives Republicans an illusion of a positive agenda. Granted, and to their credit, this time around it’s a little more serious; Dave Camp’s House Ways and Means Committee has this year continued a series of hearings on tax reform.

However, one-party tax reform is just about impossible. The problem is that tax reform involves mild, relatively invisible gains for many people — gains that are paid for through substantial, very visible costs to small groups, including many well-organized small groups. In effect, any party that moves ahead on their own is just asking for those well-organized groups (egged on, naturally, by opportunists in the other party) to attack.

There are a couple of other options that could produce an actual bill. One is to use phony numbers, most likely through projecting bogus revenues produced by cutting rates. The other is to just fudge the whole thing — as Paul Ryan’s budget did, simply assert that unspecified changes will produce the revenues that cutting tax rates will require.

It’s even vaguely possible that if a “grand bargain” actually happened on the overall budget, Democrats might decide to join in and support bipartisan tax reform. That’s possible, especially if it’s revenue-neutral, although even when all the stars line up right it’s still very difficult to do. But there’s no way it will happen before the budget wars are settled, and that doesn’t seem all that likely anytime soon.

So the most likely outcome is that the occasional hearings continue, and nothing much happens. I’ll go ahead an make that a prediction: we won’t get an scoreable, revenue-neutral (or revenue-positive) comprehensive tax reform bill this year from House Republicans.

And if the chief advantage of the talking point is to give them the illusion of a positive agenda . . . well, it will be interesting to see whether people notice that there’s really nothing there.