One of the problems with the GOP tax proposal is that it’s on a track that is maglev fast. As a consequence, the process assures that the final bill, if there is one, will contain a large number of errors both textual and in terms of unexpected policy outcomes.
David Kamin, Mitchell Kane, Daniel Shaviro, and John Steines explore the loophole in the bill “for pass-through business owners and investors (but not employees) that probably was not taken into account in the revenue and distributional estimates.”
Shaviro offers some extended comments . He suggests two possible reasons for the issues raised by this provision: one charitable (a mere misunderstanding) and one less than charitable:
Because I’m a gentle and charitable soul, I am open to the theory that the mistakenly low revenue estimate – albeit, apparently reflecting a deliberate choice to retain likely state and local income tax deductibility for business owners and passive investors but no one else – arose innocently. But a lot of foot-dragging seems to have been going on towards the end of preventing its being addressed or corrected. And at this point, even if they do correct it, I for one will be inclined to attribute it to their having decided the game was up. A mere misunderstanding could easily have been fixed as early as Tuesday, three days ago, and it wasn’t.
No one should have to wonder whether the staff intended a bad result or merely stubbed its collective toe. There should be sufficient time and effort in the development of any tax bill of this magnitude to assure that it is both well-conceived and well-designed. As a result of the rush, this bill is neither.