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News Posted on October 20, 2017

Professor Shanske Comments on Republican Tax Plan for Tax Analysts

Professor Darien Shanske commented for Tax Analysts on plans by the Trump administration and House Republicans to roll back the passthrough tax rate as part of their tax reform initiative.

The article notes that a zero income tax rate for partnerships, limited liability corporations, and other passthrough businesses was a centerpiece of Kansas Governor Sam Brownback’s tax reform plan that has been widely viewed as a disaster for the state, creating huge budget deficits while failing to deliver on promises of economic growth. Although the federal plan probably would only cut passthrough taxes to about 25 percent, it would also be likely to increase the deficit without spurring growth, Shanske said.

“It’s really hard to figure out how [cutting the rate for passthrough businesses] is a boon [for the real economy], how that is going to create more jobs,” Shanske said. “In addition to not accomplishing [the] goals of [Trump’s own] framework, it is adding to the deficit.”

Darien Shanske is a Professor of Law at UC Davis. His academic interests include taxation, particularly state and local taxation, local government law, public finance, and political theory, particularly jurisprudence.