Will Trump flub tax reform after health care failure?

Does President Trump have a learning curve? Americans could soon find out — because Trump is at risk of making the same mistake with tax reform as he did with health care, when he heeded House Speaker Paul Ryan’s Republican conventional wisdom instead of presenting a thoughtful, well-considered replacement for the Affordable Care Act. The result was a debacle that hurt Trump politically.

Much remains in flux, but Trump appears to agree with Ryan on two big changes helping the richest Americans. One would end the “death” tax on their estates. The other would end the alternative minimum income tax, which prevents them from using deductions and taking advantage of vague tax regulations to pay far less in taxes. Trump and Ryan also agree on cutting corporate tax rates and income tax rates and reducing the number of individual tax brackets from seven to three.

While Ryan’s plan includes some welcome tax-code simplifications, the nonpartisan Tax Policy Center’s review showed that 99.6 percent of the tax relief it would provide would go to the wealthiest 1 percent of Americans over its first 10 years. That’s crazy. The review noted that a previous version of Trump’s plan showed 50.8 percent of tax relief would have gone to the wealthiest 1 percent. That’s still crazy. In an era of huge income inequality and huge angst over that inequality, it’s mind-boggling to look at America’s tax code and conclude its largest problem is its unfairness to the richest Americans.

But this approach reflects a continued Republican adherence to “supply side” economics, which holds lower taxes generate more revenue. Certain tax cuts may stimulate the economy, yet if they are substantial, there is little hard evidence to suggest that they will actually result in more revenue. Bruce Bartlett, an economics adviser to two GOP presidents, says the real rationale behind supply side is to “starve the beast” — to constrict the size of government by limiting its resources.

Just a couple of months ago, it seemed reasonable to expect the Trump administration to support genuine tax reform. In interviews, the billionaire banker-investor-hedge fund operator Trump picked to be his treasury secretary — Steven Mnuchin — called for a much simpler tax code that would make it more difficult for the mega-wealthy to use skilled tax attorneys to evade taxes. And he flatly said the rich wouldn’t benefit lavishly under Trump’s tax policy because “any reductions we have in upper income taxes will be offset by less deductions so that there will be no absolute tax cut for the upper class.”

Mnuchin also spoke smartly about the need to change tax laws that encourage U.S. firms to stash at least $2 trillion in overseas corporate profits to avoid having to pay U.S. taxes. And he sounded like a downright traitor to his class by saying the Internal Revenue Service needed more resources. Maybe someone who knows how the mega-wealthy game the system is just the guy to push through the tax reform that has eluded presidents since Reagan.

Trump met with Mnuchin to talk tax policy on Thursday, so perhaps any assumption he will follow Ryan’s plutocrat-pleasing blueprint is premature. Americans should hope so. Smart tax reform could boost the economy and bring more fairness to the system. Giving the very wealthy new ways to avoid paying taxes is the exact opposite of tax reform.

If the president figures this out, the country and his approval rating will take a turn for the better.

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