Unraveling Tax Reform: The Big Beautiful Bill’s Predictable Departure from the 2017 Tax Cuts and Jobs Act

Blog Post | 114 KY. L. J. ONLINE | November 21, 2025

Unraveling Tax Reform: The Big Beautiful Bill’s Predictable Departure from the 2017 Tax Cuts and Jobs Act

By: Jarrett Napier, Staff Editor, Vol. 114 

Shortly after midnight on May 7, 1986, the hallway outside the Senate Finance Committee room was inundated with Washington’s most elite and most expensive tax lobbyists, clad in “expensive suits and shiny Italian shoes giv[ing] this hallway its nickname: Gucci Gulch.”[1] They were scrambling to respond to unbelievable developments which now made a once “radical” tax reform proposal possible.[2] And what happened inside the committee room turned these fears to reality: The Committee approved the comprehensive reform unanimously and with such drama that Chairman Bob Packwood cast the final vote while simultaneously withholding tears.[3]

The approved reform became the Tax Reform Act of 1986.[4]  While widely recognized as the most comprehensive tax reform legislation in American history, the Act boiled down to two simple goals: broaden the tax base and lower the tax rates.[5] And the 1986 Act’s brand of base-broadening was aggressive.[6] But perhaps the Act’s linchpin were the corresponding rate cuts ensuring at least an estimate of revenue neutrality, meaning that it enabled fundamental alterations to the Code without costing the federal government or American taxpayers a dime.[7]

Yet, groundbreaking as it was, the tightly knit 1986 Act slowly unraveled.[8] Just two years later, then-Vice President and Republican presidential nominee George H.W. Bush reinforced the Act’s principles by infamously declaring “Read my lips: no new taxes.”[9] But in response to mounting criticism of the Act’s “historically low rates” amid growing budget deficits, there in fact would be new taxes.[10] These materialized in the Revenue Reconciliation Act of 1990, which diluted both of the 1986 Act’s principal objectives by raising marginal rates and reintroducing preferences.[11] Yet this was merely an introduction: new preferences and tax increases slowly accumulated, again muddying the treacherous tax waters.[12]

The 2017 Tax Cuts and Jobs Act, however, returned to the 1986 touchstone.[13] It is widely regarded as the most comprehensive tax reform act since 1986, and it prioritized revitalizing the same base-broadening and rate-cutting initiatives.[14] The 2017 Act cast a much wider net for grasping taxable income, for example, by capping the deductions for state and local taxes (SALT) and home mortgage interest while even fully repealing the deduction for personal expenses like alimony.[15] But like 1986, the 2017 Act compensated for this base-broadening with tax cuts and some new preferences, namely slashing the corporate tax rate, lowering individual rates, creating preferences for pass-through income, doubling the estate tax exemption, and even repealing the “tax” associated with failing to comply with the Affordable Care Act’s individual health insurance mandate.[16] Yet the balance was not the same as 1986: The Tax Cuts and Jobs Act was not revenue neutral.[17]

But has the 2017 Act already began unraveling just like the 1986 Act? The 2025 One Big Beautiful Bill Act seems to be a paradigmatic example, specifically with respect to introducing or strengthening preferences.[18] Examples include quadrupling the SALT deduction cap and “spend[ing] far too much money on political gimmicks and carveouts” such as newly introduced deductions for personal vehicle interest, overtime pay, and tips.[19] These are ostensibly laudable goals, but they are perhaps more precisely viewed as costly campaign promises which will need to be cleaned up later.[20]

Accordingly, post-2017 tax policy seems to beg the question: Will we see the same unraveling for the 2017 Act as the 1986 Act? Friedman and Twain may conjunctively resolve the inquiry. First, recall Friedman’s criticism of lobbyists and campaign funds contributing to reintroduced tax preferences following the 1986 Act.[21] And, as Twain famously said, “History doesn’t repeat itself, but it often rhymes.”[22] Thus, it seems that 2025 merely serves as an indicator of a likely-inevitable unraveling which will fall upon later generations to rectify. Hopefully there will then remain enough bipartisan potential to do so.

[1] Jeffrey H. Birnbaum & Alan S. Murray, Showdown at Gucci Gulch 3-4 (1987).

[2] Id. at 4.

[3] Id. at 6.

[4] Id. at 284.

[5] Id. at 5, 13.

[6] See id. at 48 (“‘We’ve already stuck it to the blind, elderly, and cripples,” joked one member of the group [while discussing base-broadening initiatives]. ‘We might as well get the preachers too.’”).

[7] Ajay K. Mehrotra & Dominic Bayer, The Promise and Limits of Fundamental Tax Reform: Contrasting the 1986 Tax Reform Act with the 2017 Tax Cuts and Jobs Act, 53 U.C. Davis L. Rev. Online 93, 113 (2019).

[8] Id. at 96.

[9] Ron Elving, 6 Little Words Helped Make George H.W. Bush (A 1-Term) President, NPR (Dec. 4, 2018, at 5:13 PM ET), https://www.npr.org/2018/12/04/673249018/6-little-words-helped-make-george-h-w-bush-a-one-term-president.

[10] Mehrotra & Bayer, supra note 7, at 111.

[11] Id. at 111-112.

[12] Id. (noting a gradual unraveling and economist Milton Friedman’s prediction that lobbying efforts and campaign expenses would soon lead to reintroduced preferences).

[13] Id. at 95.

[14] Jennifer Bird-Pollan, Revising the Tax Law: The TCJA and its Place in the History of Tax Reform, 45 Ohio N.U. L. Rev. 501, 501, 507 (2019).

[15] Id. at 508, 516.

[16] Id. at 508-09; see also Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 563-574 (2012) (construing the Affordable Care Act’s individual mandate as a tax).

[17] Mehrotra & Bayer, supra note 7, at 104.

[18] See generally One Big Beautiful Bill Act, Pub. L. No. 119-21, 139 Stat. 72 (creating and strengthening tax preferences).

[19] Daniel Bunn, Alex Muresianu & William McBride, The Good, the Bad, and the Ugly in the One Big Beautiful Bill Act, Tax Found. (July 9, 2025), https://taxfoundation.org/blog/one-big-beautiful-bill-pros-cons/; see also Christopher Pullman & Richard V. Reeves, The Salt Tax Deduction Is a Handout to the Rich. It Should Be Eliminated Not Expanded, Brookings (September 4, 2020), https://www.brookings.edu/articles/the-salt-tax-deduction-is-a-handout-to-the-rich-it-should-be-eliminated-not-expanded/ (arguing SALT deduction is an unfair tax cut for the wealthy).

[20] See, e.g., Luke Garrett, Congress Passed No Tax on Tips in Trump’s ‘Big, Beautiful Bill.’ Here’s How It Works, NPR (July 3, 2025, at 5:22 PM ET) https://www.npr.org/2025/07/03/g-s1-75790/no-tax-on-tips-congress-trump-big-beautiful-bill (noting that President Trump and then-Vice President Harris each campaigned on “no tax on tips” promise).

[21] Mehrotra & Bayer, supra note 7, at 111.

[22] See Brian Adams, History Doesn’t Repeat, But it Often Rhymes, Huffington Post (Jan. 18, 2017, at 6:47 PM ET) https://www.huffpost.com/entry/history-doesnt-repeat-but-it-often-rhymes_b_61087610e4b0999d2084fb15.