Tax Reform Versus the 2021 Democratic Congress

In 2017, the Republican Congress passed real tax reform legislation.  Democrats claimed it was just tax cuts for the rich, but they pretty much always say that.  What is funny about that claim (“funny” in the bizarre sense, not funny in the ha-ha sense) is that one of the things the Democrats objected to the most in the reform was the limitation on the deduction of state and local taxes (i.e., the “Salt deduction”) to $10,000 for a couple, even though the legislation also doubled the standard deduction.  For most people, and especially middle class and below, this was a great deal.  It made tax filing simpler, and it saved them some money.  For upper middle class people in states with high local taxes, i.e., Democratic states, it wasn’t.  So, Democrats from states like California, New York, New Jersey, etc., have been pushing hard to reinstate the full SALT deduction ever since, even though it would almost entirely benefit the upper middle class.¹ 

In any case, then-House Speaker Paul Ryan and other Republicans did real tax reform.²  They were trying to make the tax system better: simpler, easier to comply with, less inefficient, raising the most money with the fewest negative impacts on the economy.  In other words, real tax reform.

What we are seeing as the Democrats try to come up with ways to “pay” for Joe Biden’s big new programs is different.  They aren’t trying to come up with any kind of intelligent or thought-through program.  They’re just trying to hit a number.  Some here; some there; some somewhere else.  The only rule is to not obviously hit people making less than $400,000 because that was what President Biden promised in his campaign last year.  The whole process is sort of like an order at a Chinese restaurant: some from column A, some from column B, some from the next page, until you get enough food or, in this case, enough money to “pay” for the programs.^3,4 

Which is how most of our tax bills are passed: With no thought to how the taxes fit together; whether they raise the most money with the least cost in compliance, enforcement, and economic efficiency; etc.  And it’s why we need people like former Speaker Ryan to come around every twenty years or so to pass real tax reform that tries to clean up at least some stupid tax provisions that has been passed by unthinking Representatives (which is far too many of them) since the last real reform. 
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¹ The limit on the SALT deduction doesn’t matter that much for the really rich because, once the ATM kicks in, state and local taxes aren’t deductible anyway.
² Obviously, Donald Trump wasn’t involved, but that was a plus in terms of getting something done.
³ If it is culturally insensitive to talk about Chinese restaurants, let me change the analogy to piling food on your plate at a Swedish smorgasbord.
⁴ Megan McArdle, in a tweet yesterday, may have identified what the Democrats are trying to do with their tax on unrealized capital gains of billionaires:

“I don't think they care about getting it right. The point is to get the money in the CBO score. If a court later overrules it, fine (maybe even good, if the tax is a bad idea). It doesn't matter; you got the bill passed, which is the only time anyone cares about funding levels.”

I wonder what Warren “I should pay more taxes” Buffet thinks about this proposal.