Cutting taxes will be harder than Trump thinks

The big issue on everyone’s mind: As noted whenever the words “tax reform” are uttered, under reconciliation, a bill cannot add to the long-term deficit—that is, it can’t blow a hole in the budget that extends beyond 10 years. This means that the cost of any cut—such as, say, dropping the corporate tax rate from 35 percent to 15 percent or 20 percent—must be offset.

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The reform blueprint Paul Ryan was peddling last year balanced the numbers using a Border Adjustment Tax. By placing a levy on imports while making export revenues tax deductible, a BAT would have increased tax revenues by $1 trillion or so over the next decade. The provision was not, however, beloved by import-reliant businesses (including retail giants like Wal-Mart), who linked arms and groused, loudly, until the BAT was officially declared dead in July.

This has left reform architects in the vexing position of scurrying to fill that $1 trillion-plus hole.

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