Lessons From the 1986 Tax Bill

Lessons From the 1986 Tax Bill

Blog Post

By No Labels

When contrasting the landmark 1986 tax reform bill with the efforts being made in Congress today, here’s a valuable statistic to keep in mind. The House Ways and Means Committee heard testimony from more than 450 witnesses prior to passing its legislation three decades ago, according to The New York Times. This year, that same committee passed its tax bill without a single hearing.

Of course, 1986 was a very different time in America and in Washington. The economy has changed dramatically. Congress was split back then (Democrats held the House), while Republicans control both chambers today. Ronald Reagan was in his second term, while President Trump is in his first year.

But the 1986 tax bill was the largest overhaul of the tax system in modern political history. That’s a process worth mining for lessons as separate tax bills move through the House and Senate this year, perhaps on their way to forming a single, substantial piece of tax legislation. Here are some major differences between now and 1986.

There Was More Bipartisan Cooperation Back Then

In 1986, Reagan was a relatively popular Republican president, but he worked with Democrats like House Speaker Tip O’Neill and Ways and Means Committee Chairman Dan Rostenkowski to push the reform legislation through to passage. In fact, because Democrats controlled the House, the legislation would not have been possible without a bipartisan approach.

Indeed, when the final legislation passed, the Senate vote was 97-3 and the House approved the bill with a majority of both parties in support.

Today, there is no such effort either because Republicans won’t invite Democrats to the table or because Democrats aren’t willing to come. Whatever the reason, the House bill made it through Ways and Means and got passed on the House floor without Democratic support. The Senate bill passed the Finance Committee similarly. Now, Republicans who control the Senate seek to pass the bill under a special process that would allow them to do so on a simple majority vote, without Democratic support.

There Was More Public Process Back Then

As the figures above show, the House Ways and Means Committee held many hearings. Similarly, the Senate Finance Committee had 33 days of hearings during the run up to the 1986 bill, according to The New York Times. The tax-writing committees in the current Congress did not hold hearings like that.

In addition, the Reagan administration spent roughly a year creating a tax plan before it was announced. The current process is moving fast, with far less public process than the effort 30 years ago.

There Was No ‘Always On’ Communication Back Then

Reagan was directly involved in the selling of the tax bill, and so is Trump. Both presidents took the unusual measure of traveling to Capitol Hill to support tax legislation. But Reagan operated in a very different political climate.

The advent of a 24-hour news cycle and the constant presence of social media makes things faster and arguably more volatile now. Trump, for example, took a jab last weekend at retiring Republican Senator Jeff Flake, who has been a vocal critic. Calling him “Sen. Jeff Flake(y)” in a tweet, Trump wrote, “He’ll be a NO on tax cuts because his political career anyway is ‘toast.’”

In an environment where Republicans hold a 52-vote majority in the Senate and need at least 50 yes votes to get a tax bill passed, there’s no telling what impact skirmishes like this may have.

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