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President Trump’s tax proposals are very much in the news, currently. General consensus suggests that we will see some new tax legislation enacted before mid-term elections in 2018. However, these questions remain: Will we see tax legislation in 2017 and will it be retroactive to January 1st? Or will we see legislation in 2018?
Lawmakers have their eyes trained on September of 2017. Trump officials don’t plan to give Congress a detailed plan until September. Paul Ryan confirmed to colleagues that he expects legislation to emerge in September, after Republicans in the House, Senate, and White House reach an agreement.
In June, Majority Chief Tax Counsel to the House Committee on Ways & Means, Barbara Angus, concurred saying: “There is unanimous agreement to see tax reform in 2017, so that’s what we’re working toward…”
Kevin Brady, Chairman of the House Ways & Means Committee, announced on June 26, 2017 that there will be two hearings on tax reform in July – one for small business and another for individuals and families.
From a practical standpoint, it’s wise to begin considering the administrative impact on items such as tax forms and software would have if changes are pushed through late in the year that are retroactive to January 1, 2017.
Reform or Cuts?
One question worth considering is will we see true tax reform or just a round of tax cuts? Although the terms are often used interchangeably, ax reform and tax cuts are two very different things.
The Ronald Reagan era (1981 & 1986) was known as one of tax reform. During this era, the tax code was simplified, the tax base was broadened, and many tax shelters were eliminated. The Revenue Code was literally renamed “The Internal Revenue Code of 1986”.
The George W. Bush era (2001 & 2003) was one focused more on tax cuts. While much of the Bush era cuts were eventually made permanent in 2012, uncertainty over their sun setting provisions, originally set for 2010, garnered the attention of the tax world for over a decade. Cuts were extended through 2012 resulting in the fiscal cliff deal at the end of that year.
Considerations that will ultimately define the Trump era include the state of the U.S. economy, partisanship and seats in Congress and a resulting climate of reconciliation or prolonged filibustering, and budgetary concerns.
If you have any questions on how this may impact you or your business please contact Thomas Edgar, CPA at email@example.com