Republicans are pushing a tax bill through Congress as though we were in the midst of a national emergency. Except we’re not.
Four historians with tax expertise say the rush on Capitol Hill to make such huge changes to the tax code is unprecedented. Congress has moved quickly on taxes and spending in the past, but it’s been in moments of national emergency — when the United States was fighting in the first and second world wars, for example, or when the economy was teetering on the brink of collapse at the end of the George W. Bush administration.
“In that sense, it’s really unprecedented,” said Ajay Mehrotra, a law professor at Northwestern University and president of the American Bar Foundation, pointing to the hasty, sloppy process adopted despite the lack of any sort of national emergency necessitating it.
The House of Representatives and the Senate passed tax bills in the span of two weeks in November. Now they’re aiming to get a bill to President Donald Trump’s desk before Christmas — assuming, of course, they have the votes, which isn’t guaranteed. This is lightning speed for Congress.
“This was manufactured urgency,” said Joseph Thorndike, a tax historian and director of the Tax History Project. “There was nothing urgent about this at all, not even the reconciliation instructions required this kind of urgency. The urgency here was completely willful.”
The GOP’s tax bill would permanently slash the corporate tax rate, offer temporary cuts for individuals, and repeal Obamacare’s individual mandate, a maneuver that would leave 13 million more people uninsured by 2027. It would disproportionately benefit corporations and the wealthy, hurt the poor, and increase the deficit.
The bill is historically quick, historically partisan, and historically unpopular.
Big changes to the tax code were usually made in time of war
The federal income tax, as it exists today, was codified with the 16th Amendment in 1913. The US had levied income taxes before that — during the Civil War, for example — but it wasn’t in the US Constitution until the 20th Century.
The income tax was modest initially, but World War I moved it to the center of federal financing as Congress reduced tariff rates and international trade declined. The US passed the War Revenue Act of 1917 six months after declaring war on Germany and in the run-up to the war imposed new and greater taxes as well. And the Revenue Act of 1918, which wasn’t technically signed until 1919, took longer — in part because the war was already over.
The income tax was expanded to the masses during World War II, and the government sold it, in part, by giving taxpayers a “very clear sense of what they were funding,” said University of Virginia history professor Brian Balogh. Disney in 1943 released a propaganda cartoon urging Americans to pay “taxes to fight the Axis.”
President Lyndon Johnson in the 1960s was criticized for being slow to raise taxes to pay for the Vietnam War.
While the US is at war right now, it’s not starved for military funding (and the bill, in any case, would cut federal revenue rather than increase it). Attempts outside of wartime to change the tax code usually take longer, especially if it’s actual tax reform and not just cuts — which proponents of the current bill say it is.
President Ronald Reagan signed the 1981 tax cut bill in August of that year, about eight months after he took office. But even that effort took more time than this. And Reagan signed the bipartisan 1986 tax reform bill into law more than 10 months after it was initially introduced and more than two years after Reagan called for comprehensive tax reform in his 1984 State of the Union address.
The Bush tax cuts were relatively speedy efforts — President George W. Bush signed the first bill in June 2001, about five months after taking office. But they were cuts, not overhaul, and the environment was much less politically fraught.
“I don’t think even under the press of wartime needs has anyone ever moved this quickly,” Thorndike said, though he cautioned he doesn’t think Republicans would have come up with something very different than what they’ve produced, either. “It’s not clear to me that the broad outlines of the bill would have been all that different if they had taken another six months to do it.”
They could have avoided some mistakes, though — such as the Senate accidentally adding in a $250 billion provision that would have undone many of the benefits of their bill for corporations.
“When you do serious, comprehensive tax reform, it usually takes time. This is tax reform on the fast and cheap,” Mehrotra said.
It’s not just the timing, it’s the division
It’s not just the speed with which the Republican tax bill is being passed that’s notable. It’s also the partisanship — they’ve got essentially no Democratic buy-in on what they’re trying to do. That impacts the durability of the legislation and the substance.
As Vox’s Ezra Klein recently pointed out, among the many problems with the Senate tax bill is that dozens of its most important provisions are set to expire after a few years of passage, and the individual tax rate cuts expire in 2025. Republicans are betting that a future Congress will stop that from happening, but there are no guarantees.
“Things endure much better if you can get buy-in from both parties,” Balogh said.
Case in point from recent history: the Affordable Care Act. It was passed on a partisan basis, and Republicans have worked to undermine and get rid of it ever since.
And because the bill is so partisan, it is also more extreme than, say, the 1986 legislation passed under the Reagan administration that marks the United States’ last effort at true tax reform. Even tax cuts passed in 1981 under Reagan and in the early 2000s under George W. Bush had something in them for everyone. What the GOP is proposing this time around leaves many Americans worse off.
“What makes this different from previous Republican-designed tax cuts that have cut taxes on the wealthy and corporations is that this doesn’t really cut taxes for anybody else,” said Washington and Lee University history professor Molly Michelmore. “You can’t really look at the distributional tables in this tax bill, in either version, and say everybody is going to get something.”
The bill is historically unpopular, too
Beyond the speed and partisanship that make the GOP’s tax efforts stand out from a historical perspective, there is also the fact that what they are doing is also historically unpopular.
A recent USA Today/Suffolk University poll found that just 32 percent of Americans support the GOP tax plan, while 48 percent oppose it. A mid-November Quinnipiac University poll found that 25 percent of Americans support the plan, while 52 percent oppose it. Its lowest level of public support for any major piece of legislation enacted in the past 30 years.
A March 2001 Gallup poll on the first round of Bush tax cuts, for example, found that 56 percent of Americans favored the cuts at the time. A Gallup survey taken days after Reagan signed his tax cuts into law found that 51 percent of Americans were in favor of it. As FiveThirtyEight’s Harry Enten recently noted, even some tax increases have been more popular than the current Republican tax bill.
That could explain part of the speed aspect of it — if they’re going to irritate some constituents regardless, Republicans may have concluded it’s better to rip of the Band-Aid. They’re not necessarily trying to please most people anyway but instead their donors.
Rep. Chris Collins (R-NY) in November openly said as much. “My donors are basically saying, ‘Get it done or don’t ever call me again,’” the New York Republican told reporters.
How it will play out in the long run is an open question.
“We’re not facing a dire economic crisis, and in fact, all of the economic indices seem to argue against this kind of a tax cut,” Michelmore said. “It’s an interesting question as to whether or not this ultimately turns out to be a win for the Republican Party. I don’t know that this ends up being a win for them in the long run.”