On November 9, 2016 we posted President-Elect Donald Trump Is Less Than Ideal for Tax Advisers? where we discussed that Donald Trump has proposed tax reforms that would:
- significantly reduce marginal tax rates for both individuals and businesses,
- increase standard deduction amounts to nearly four times current levels,
- limit or repeal some tax expenditures,
- repeal the individual and corporate alternative minimum taxes and the estate and gift taxes, and
- tax the profits of foreign subsidiaries of US companies in the year they are earned.
So Where Does That Leave Tax Advisers?
Fast-forward 4 Months and now according to Taxnotes
Tax Reform Is 'Impossible' This Year."
Warren Payne, a former House Ways and Means Committee policy director now with Mayer Brown LLP, believes that passing tax reform by August will be ‘‘impossible’’ this year. Rather, he suggested during a conference call March 16 that it is more likely to be addressed in early 2018. Payne pointed to the border adjustment provisions in the House Republican tax reform blueprint, noting that they are both contentious as well as integral to the entire package. He speculated that the Trump administration will wait several weeks before offering a policy position on the border adjustable tax.
Payne contrasted the House Republican proposal for international tax reform with the Trump administration’s plan during the campaign, which proposed keeping a worldwide system in place and
ending deferral, suggesting that it remains unclear whether President Trump would support a move to a territorial-style system.
‘‘If the administration decides to forgo the border adjustment policy, it must either find alternative ways to broaden the tax base, settle for a higher corporate rate, or proceed with tax reform that is a net tax cut,’’ Payne said. He explained that a border-adjustable tax could be a huge revenue boost, estimated to raise almost $1 trillion over 10 years that could be used to reduce rates and offer immediate expensing, and it would serve as a strong anti-tax base erosion measure. He added that the tax could account for about an 8-point reduction in the corporate income tax rate.
‘‘It takes months, not weeks,’’ to draft, debate, and pass tax reform legislation, Payne said.
House Republicans are struggling to round up the votes needed to move the AHCA, but John Buckley, a former chief tax counsel for House Ways and Means Democrats, said passing tax reform legislation will likely be even tougher. ‘‘The political choices are going to be more difficult. There would be Organized Business Opposition on tax reform that you don’t see on healthcare reform.’’
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Read more at: Tax Times blog