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Noah Smith

The Next Step in Tax Reform Is Tax Repair

Republicans knew the flaws in the bill and passed it anyway. It will be up to Democrats to fix the mess.
The job isn't finished.

The job isn't finished.

Photographer: Mark Wilson/Getty Images

The Tax Cut and Jobs Act of 2017  -- commonly known as the Republican tax reform bill -- has a number of good things in it. My Bloomberg View colleague Justin Fox has an excellent rundown. The corporate-tax rate cut was something that needed to happen for a long time, and mainly just follows the example set by other developed nations. Limits on the mortgage-interest deduction and the tax deductibility of interest payments will discourage companies and households from taking on too much debt. The limiting of deductions for state and local income taxes, although probably intended as a cynical move to tax residents of high-tax blue states like California and New York, could also be progressive in its impact.

But overall, the tax bill is a mess. Since it was rushed through Congress without extensive debate, there are probably tons of loopholes and perverse incentives in the law that will be discovered in the years to come by clever tax accountants and lawyers. These loopholes and bad incentives will need to be closed -- if not by the Republicans, then the next time the Democrats are in power.