Reuven S. Avi-Yonah (Michigan; Google Scholar), OBBBA and The Next Tax Reform:

This paper compares OBBBA to the 1986 tax reform and suggests what a future US tax reform building on OBBBA might look like.

The One Big Beautiful Bill Act (OBBBA) as passed by the Senate is far from an ideal tax reform. If the ideal is the 1986 tax reform, then a tax reform should be revenue and distributionally neutral, broaden the base, and cut the rates. OBBBA falls short because it (a) is not revenue neutral, (b) is not distributionally neutral, and (c) narrows the tax base (e.g., by maintaining and expanding section 199A) while not reducing tax rates (since both the individual and corporate tax rates stay the same, and the FDII and GILTI rate are raised).

Nevertheless, OBBBA does contain some of the seeds of a good tax reform. To understand why, it is first necessary to define what a good US tax system would look like.

A good tax system has three goals: revenue, redistribution, and regulation. The most efficient way to achieve these goals is to have a broad-based consumption tax (i.e., a VAT) for revenue, a progressive individual income tax for redistribution, and a corporate tax on above-normal corporate returns for regulation.

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