Forbes has published an article, “New Normal Of Tax Uncertainty,” which discusses the new era in which tax bills are undergoing revisions more frequently than in the past. The article begins as follows:
Something seems amiss as Congress appears ready to revise US tax policy again. Should we expect our tax system to undergo wholesale changes every 4 or so years? After all, the enactment of the Tax Cuts and Job Act significantly overhauled the tax system in 2017. Now the 2021 Build Back Better Act proposes tax increases, including, in earlier iterations proposals of fundamental changes in the treatment of capital and income including the Billionaires Tax.
This constant shift of taxes is a rather new phenomenon. Historically, tax policy has remained constant for long periods. Since its enactment in 1913 until 1986, the modern income tax has undergone major revision only a handful of times. Since 2004, however, we have significantly revised our tax policy three times and proposed a fourth revision. These current swings in tax policy seem to cut against conventional wisdom. And maybe most critical, this movement is important to understand the current early/mid-21st century political economy of the tax system.
How did we enter an era of permanent tax uncertainty? Our tax policy has entered into a state of constant flux because Congress stopped coming together with bi-partisan filibuster-proof legislation after 1986 (or maybe 2004 depending on your point of view). Instead, both parties began using the reconciliation process as the primary tool for legislation.
Click here to see the full article: “New Normal Of Tax Uncertainty.”
Posted by Bennett Mansour, Associate Editor, Wealth Strategies Journal.