As President Donald Trump and congressional Republicans begin their attempts to pass a comprehensive tax-reform plan, it's starting to look as if they will find themselves impeded by lobbyists and other individuals who strongly support many of the loopholes that any new legislation might close.
As ABC News explains:
Major cherished tax breaks — from deductions for mortgage interest and charitable donations to incentives for 401(k) contributions — have deep-pocketed supporters and lobbyists who are sure to fight to preserve those benefits. They add up to hundreds of billions of dollars in lost potential revenue that could otherwise go to rebuilding roads and bridges or social programs or even to help finance broader tax cuts for people and companies.
This hard political reality runs contrary to the populist rhetoric with which Trump tried to sell his strategy of reform in a speech Wednesday. Yesterday he stated, "we need a tax code that is simple, fair and easy to understand. That means getting rid of the loopholes and complexity that primarily benefit the wealthiest Americans and special interests."
According to Howard Gleckman, senior fellow at the Urban Brookings Tax Policy Center, it will be very difficult for Trump to pull off the kind of populist tax reform he has promised, without simultaneously adding to the budget deficit.
"The general question is, can they write a tax bill that cuts tax rates the way they're talking about without adding to the deficit and without eliminating or scaling back some significant tax preferences? The answer to that question is, No they can't." Gleckman told Salon.
He added, "The kind of tax cuts that the president talked about during the campaign and he talked about in that outline that they put out in April implied tax cuts in the neighborhood of $7 to $8 trillion over the next ten years. It's actually not possible. There's not enough money in all of the tax preferences in the entire tax code to pay for tax cuts that big. And even if you tried to implement tax codes half that size, you'd still have to eliminate some of the most popular tax preferences on the books."
Gleckman mentioned "deductions for state or local taxes, mortgage interests or charitable giving, exclusions for employer-sponsored health or contributions to retirement savings plans" as examples of the kinds of tax preferences that would be vulnerable as a result of Trump's tax reform plans.
"Those are preferences that benefit middle income and upper middle income people. They aren't special interest loopholes that politicians like to talk about," Gleckman explained.