Reilly on Shaviro on the pass-through rules

In his newly posted piece on Forbes.com, "Law Professor Argues New Pass-Through Rules (199A) Are Horrible," Peter J. Reilly in Forbes reads my article on the pass-through rules, supplemented by a phone interview. He notes that I published the piece in the British Tax Journal, rather than in the U.S., because (however justifiably) its tone was less temperate than is usual for me.

He notes that I credit section 199A with having "achieved a rare and unenviable trifecta, by making the tax system less efficient, less fair, and more complicated," and that I compare the 2017  proceedings to Gilded Age politics.

It's a fun response by Reilly, and insofar as he disagrees with me it's because my noting that the provision will require business people to "pay large sums to tax lawyers and accountants to figure out how best to structure their arrangements with an eye to minimizing federal tax liability" is good news for accountants such as him.  "So a small portion of those large sums is coming my way."

Reilly also quotes my noting, in the article, that the motivation for the pass-through rules appears to be sociological - aimed at rewarding members of the business elite while excluding member of the more educated professional and academic elites, simply because these are self-consciously distinct groups and the former were driving the bus in 2017.

He responds that this mistakenly classifies accountants as part of the educated classes and the intellectual elite. That may well be right, if one looks just as accountants from a sociological standpoint. But in the 199A list of professions banned from getting the 20% tax cut (other than below income phase-out), accountants were unlucky enough to get grouped, based on prior statutory precedents, with the likes of lawyers, doctors, and artists.

BTW, on a related note, I recently heard through the grapevine an explanation of why, at the last moment in the 2017 enactment process, architects and engineers were taken out of the professional classes' exclusion from full pass-through benefits. The word is that Bechtel told their Congressional patrons (or servants?) to take out engineers, and architects got pulled too because the two groups were listed right next to each other, and a second deletion was thought useful in obscuring the political deal.

Gives you a nice sense of the sheer thoughtfulness behind contemporary Congressional Republican industrial policy.