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That's More Like It

September 28, 1986

Like most members of Congress, Rep. Lynn Martin, a Republican from the industrial city of Rockford, Ill., could look around her 16th Congressional District and count the reasons for voting against tax reform: It would hurt a machine tool plant here, a steel mill there, and farmers everywhere. Yes, the bill would help the working poor, but Martin does not expect many of them to vote Republican anyway.

In the end, Martin overcame cold feet and voted aye. "I found, as worried as I am about what this bill does, I am even more worried about the current code," she said. "The choice today is not between this bill and a perfect bill. The choice is between this bill and the death of tax reform."

With the President's signature, the American tax code will undergo what is properly described as an historic overhaul. In the long run, and on balance, it should serve the country well. But it will take time to weather an uncertain transition period. Years will pass before the experts can assess its impact on the economy.

Some members of Congress described their vote for the bill as a leap of faith. Now, the American public must exercise considerable patience before reaching a judgment. The focus should be not on instant winners and losers, but the long-range good of the Republic. Economists must resist the temptation to blame every discouraging economic statistic on the new tax rules. The economically depressing effects of the bill are most likely to surface first. The benefits will emerge only over time. At the same time, Congress must be prepared to squash any new, obvious inequities that appear in the form of unintended consequences.

There never was a great public clamor for tax reform. When members of Congress went home for their recent recess, many of them discovered with a shiver that a surprising number of their constituents were decidedly cool to the idea.

But there is no doubt that the bill curbs the most blatant inequities in the present tax code, particularly in regard to the working poor vis-a-vis the wealthy who have access to a variety of tax deductions and shelters. The Center on Budget and Policy Priorities says the conference committee version of the bill deals even more fairly with the poor than either the House or Senate measures.

Unfortunately, expectations about tax cuts may have been raised too high as proponents attempted to build political support for tax reform. Many Americans who are expecting relief, or believe they deserve it, will find they must pay as much tax as they do now, or more. Many Americans should be paying more than they do now. But the bill may unfairly penalize working couples and small families relative to the reductions to be enjoyed by larger families.

Equity and long-term economic growth were major goals of tax reform from the beginning. Reform was not meant to provide another bonanza of tax reductions or a quick fix for deep-rooted economic problems. In a sober and thoughtful analysis of the bill, the Urban Institute concluded that the overall impact of tax reform will be positive, but subtle and long in coming. The greatest benefit perhaps will be to restore trust in the system. That can be achieved only if the people now match Congress' leap of faith with one of their own.

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