Robb: Andy Biggs' letter proves why Republican tax reform is doomed

Monday, 13 November 2017, 09:17:56 PM. Most Republicans in Congress are social conservatives before economic ones, so even if their reforms pass, they'll do less for growth than they could.

Robert Robb: Most Republicans in Congress are social conservatives before economic ones, so even if their reforms pass, they'll do far less for growth than they could.

A letter from Arizona Congressman Andy Biggs illustrates why tax reform is unlikely to pass in Congress. And why, if it passes, it will do considerably less to promote growth than it could.

In the letter to House Speaker Paul Ryan and Ways and Means Chairman Kevin Brady, Biggs asked for three changes in the House bill: make it retroactive to this year; decrease all the individual income tax rates, including the top one; and restore the adoption tax credit.

In other words, reduce taxes more, but broaden the base less.

The larger issue with the adoption credit

The adoption tax credit isn’t one of the biggies. According to the Joint Tax Committee staff, it costs roughly $500 million a year. Those with incomes up to about $200,000 can reduce their taxes by $13,460 for adoption expenses.

Symbolically, however, it is illustrative. Social conservatives believe in using the tax code for social engineering as much as do liberals, just for different purposes. A tax credit for adoption is viewed as part of the fight against abortion. Arizona Rep. Trent Franks was another prominent advocate for its restoration, which was successful. The Ways and Means Committee put the adoption tax credit back in before passing the bill.

Social conservatives are also insisting on increasing the child tax credit from $1,000 to at least $1,600, and increase eligibility to those making up to $230,000 a year. This one is a biggie. That’s estimated to cost $640 billion over 10 years.

Social conservatives view this as being pro-family. But it is anti-growth.

That's a barrier to pro-growth tax reform

The House and Senate tax bills do a lot to lower marginal income tax rates for corporations. But they do very little to lower marginal tax rates for individuals, except for small business owners.

Conventional conservative economic theory holds that marginal tax rates for individuals are as important as those for corporations, if not more so. But after lowering corporate taxes and expanding social conservative tax credits, there isn’t enough money to do much to lower individual marginal rates.

ROBB: 3 big flaws in the House's tax reform plan

There is also a question about the relationship between the individual and the government that divides libertarian conservatives from social conservatives. The libertarian perspective is that whether you have kids, by birth or adoption, is up to you. Don’t ask others to help pay for them through the tax code.

Most Republicans in Congress are both social conservatives and economic conservatives. But they are social conservatives first, and in terms of enacting pro-growth tax reform, that’s a problem.   

Reach Robb at robert.robb@arizonarepublic.com.

MORE FROM ROBB:

Republicans lose Round 1 on tax reform

Will fewer occupational licenses make it easier to work?

Blow up Arizona's school letter grades and start over

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