As official Washington emerges from its election night VIP lounge hangovers and post-campaign thousand yard stares, thoughts have turned to the early agenda of a Trump Administration.
Toward the top of that list is fundamental tax reform. Many of the stars are aligned. Trump ran on a big tax cut package. The House GOP, via Speaker Ryan and Ways and Means chairman Kevin Brady (R-Tex.) have developed the deep dive outline of what tax reform will look like. Another element helping the cause here is that tax reform has gone through the process of critical re-thinking and data mining known as “reform conservatism.”
Often falsely castigated as a moderation, reform conservatism is actually an exercise in using a tabula rasa approach combined with rigorous conservative principles to re-source policy given today’s hard data and facts. Tax reform has gone through this, while other issues like immigration and trade have yet to. As a result, tax reform now looks tanned, rested, and ready to go.
What are the elements of tax reform in the Trump era that reflect reform conservatism?
Taxes should encourage, not impede, infrastructure investment. Infrastructure is a buzzword these days, with Trump calling for a rebirth of construction on roads, airports, etc. Tax reform–modern tax reform–recognizes that the tax code has a part to play. We need to move from the current system of “depreciation” (i.e., business fixed investment is slowly deducted in pieces over many years) to “full expensing” (i.e., business fixed investment is deducted in full in the year of purchase). This is not only common sense and moves toward neutrality, it also happens to be manfully pro-growth.