Among the poll promises of President Trump was one that really caught the eye of finance professionals and experts across the country. With his promise to completely overhaul the tax system prevailing in the country, Trump did bring the spotlight onto an issue that has, surprisingly, not received the attention it probably should. The U.S. tax system is significantly outdated, given that the last detailed review and revamp was carried out way back in 1986. Back then too, the tax system had been sadly out of date and out of sync with the prevailing needs and these had been addressed by bringing down personal tax rates and simplifying the system, as a whole. There is no question that President Trump is on target with his intent to call for a do- over with the tax system but will he address the right aspects and will the reforms set things right, these remain the million dollar questions.
Why it should be easy to do now
Back in 1986, the situation was quite different from what we are witnessing today. There was a Republican President in the White House but the House of Representatives was Democratic. Yet, the two managed to work together in collaboration with a Republican Senate to work on some really appreciable changes to the tax laws.
President Trump has a clear advantage in this sense. He will not be facing a Democratic house in either instance since the Republicans have full control over both houses of Congress as well as the Presidential seat. Also, there is no question of the Democrats opposing a major revamp of the tax systems since they are as keen to support any such move as the Republicans. The Democrats have, in fact been rather vocal about how outdated the system is.
The possible hurdles in the pathway
However, experts point out that this happy state of affairs is not really going to help pass any major tax reform bills or help in execution of any major changes to tax structures. In 1986, the Republican President’s move to do so was actually pushed through to success by the opposition party’s support which managed to override any criticism from the houses. Also, there were several highly skilled, experienced individuals who managed to take the bill through until it was passed and then executed it to perfection. Today, many of the Democrats stand firm about the need to keep corporate tax rates at their current high levels while a good many Republicans believe that tax rate cuts are absolutely essential. This dramatic contradiction in ideas is only going to pave the way for a Mexican Stand- off that may never end.