Tax Reform is a Game of Musical Chairs that will Hurt your 401(k)

During the 2016 campaign, Donald Trump promised tax cuts. Today, he unveiled them. Yet regardless of those cuts, the IRS still must generate the same amount of revenues in order to avoid a deficit. So, instead of seeing tax cuts, we’ll see tax reform. Once the Danse Macabre music stops playing and everyone has claimed their chair, many Americans will be left standing, chairless and all.

How tax cuts became tax reform

Republicans aim to pass a tax bill by reconciliation, rather than by negotiation with Democrats. This requires the bill to be deficit neutral, meaning the GOP needs a tax reform bill that will generate some revenues in the short-term rather than implementing real tax cuts.