The Epemeral Tax Bill

Will today''s big changes be gone tomorrow?

Those few of us old enough to recall that the Reagan tax cuts of 1981, then billed as the biggest tax cuts in American history, were followed unexpectedly by the Reagan tax increases – camouflaged as revenue enhancements – of 1982, appropriately labeled the largest tax hikes in American history - are understandably wondering how stable our new just enacted tax regime will be.

My personal partisan guess is that it won’t provide taxpayers, particularly on the corporate side, what they crave most, stability. While everyone wants their tax bills lowered, those required to make long-term plans value predictability more. Ask the clean energy community that just saw the tax incentives they were relying on evaporate.

There are several reasons to suspect the new rules won’t last long. One is that the government will need more money. Sometime soon a majority will decide that the cuts in social spending are too big or the markets will decide that the debt is too big – or both – and there will be relentless pressure to raise revenues, a goal easier to achieve now that the tax-cutting Tea Party has proven itself to be a tiger both defanged and toothless.

Given a White House where instability is the top priority, it is safe to predict the defining line between bugs and features will become increasingly fuzzy in the quest for continuing spotlight centrality.

The inevitably of change is explained by a recent conservative analysis of the inherent tensions involved in medicaid reforms, that promise beneficiary protections coupled with massive cost savings. But achieving both goals simultaneously is less than improbable. It is an impossible dream.

If the cuts save the projected amounts that generate political pressure to reverse them. And if benefits are protected, the anticipated savings won’t be achieved, further expanding the deficit and fueling pressure to reduce it.

For those readers unschooled in how Congress works, it is useful to remember that when legislators use the word permanent, it has a rather specialized, technical definition which is to say that while there’s no sunset date, things may be subject to change in subsequent congresses – or even by the courts.

In short, those who say there’s no certainty in life but death and taxes would do well to narrow their focus. Death is apparently here to stay. But taxes, now more than ever, remain as unpredictable as the weather.

That’s reassuring for my friends earning a comfortable living as tax lobbyists, but a warning to the rest of us.