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Loopholes In The GOP Tax Plan


As congressional Republicans work to reconcile the difference between the House and the Senate tax bills, the public has gotten its first look at the substance of that bill. And there could be some problems to work out. Many major laws are tweaked after they're passed to work out technical kinks. But because of the haste around this bill in particular, some are worried that there will be more unforeseen issues than usual on a bill that will affect the pocketbooks of millions of Americans. I'm joined now by Greg Jenner. He's a partner at Stoel Rives law firm and a former top tax official under President George W. Bush. Thank you so much for joining me.

GREG JENNER: My pleasure, Lulu.

GARCIA-NAVARRO: You say this may create more problems than past efforts. Why?

JENNER: Well, I think you mentioned it before. It's moving through with incredible speed. And with speed comes mistakes.

GARCIA-NAVARRO: When you say mistakes, what are you talking about?

JENNER: Well, you know, a lot of this is mind-numbingly complex tax rules that only a tax lawyer would love. But, for example, one of the signature proposals in the bill is a lower rate for what are called pass-through entities, and that's never been done before. The theory is that when you have, you know, small businesses that operate in, like, partnerships or sole proprietorships, you want to give them a break. The problem, however, is that that rule can be manipulated and gamed by very smart people. And so what they've done is they put in a lot of complexity to prevent some of that gaming. And with that complexity are going to come rules that are going to get bent, that are going to get avoided, that are going to get jumped over. That's just an example.

GARCIA-NAVARRO: I want to get your opinion right now from what you know of the bill. You know, Republicans have long wanted to simplify the tax code. It's almost an article of faith in the party now. Do you think this plan will achieve that?

JENNER: The answer is yes and no (laughter). There are certainly some simplifications in this bill that are well worthwhile. For example, raising the standard deduction for individuals is going to result in incredible simplification because it will mean that fewer people have to itemize. On the other hand, as I mentioned, you know, the pastorate provision, which is a signature piece of this bill, is incredibly complicated. So I would say that there are some very, very good simplifications in here and some provisions that are not too simple.

GARCIA-NAVARRO: All right. So we're going to have congressional Republicans now meet to try and hash out the differences between the House and the Senate plans. Can't some of these problems be resolved then?

JENNER: They can, and they will. But, you know, I've described this process - it's like peeling an onion. There's going to be layer after layer after layer of nuance that are - that's only discovered over time and with multiple readings. So those - and those nuances tend to be discovered as you have time to work on the bill. But this is going into law immediately and will take effect on January 1. So there are going to be a lot of things that are not discovered in time and can only be worked out over time.

GARCIA-NAVARRO: Is there any hope of a legislative fix, a second piece of legislation that might remedy these issues further down the line?

JENNER: Yes, absolutely. In fact, technical corrections, as they're referred to, are inevitable in any tax bill. The interesting thing, though, is that technical corrections can't be pushed through with a 51-vote majority in the Senate like this bill is being put through. So it becomes - technical corrections would become a tax bill that's subject to amendment and all of the add-ons that the - that Congress is going to try and avoid. So what that means is that it's going to be very, very difficult to fix the bill once it gets enacted.

GARCIA-NAVARRO: That's Greg Jenner. He's a partner at Stoel Rives law firm and a former tax official under President George W. Bush. Thank you so much.

JENNER: My pleasure - thank you, Lulu.

(SOUNDBITE OF GEOTIC'S "NAV") Transcript provided by NPR, Copyright NPR.

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