According to Reuters US President Donald Trump has revealed that he will make a major tax reform announcement this Wednesday, 26 April 2017.
We previously posted on March 24, 2017 Breaking News - Possibly No Tax Reform This Year! 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?
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Fast-forward and now it appears that
Tax Reform Is 'Impossible' This Year."
Now according to Law360 Businesses that entered 2017 with a high degree of optimism for the prospects of tax reform are now feeling increasingly uncertain following President Donald Trump's latest decision to once again put tax reform on hold while going back to reworking health care policies.
All the talk of tax reform without any substantive action from the president, or even so much as an outline from the White House for tax policy proposals, has tempered the sanguine disposition that businesses had at the start of the year, experts say.
"There is a window in which tax reform can be taken up and that window will close once we get into the election season next year for midterm. I would expect that they have to get something done by the early part of next year or everything might start to get derailed," David Blair, an attorney and chair of Crowell & Moring LLP's tax group, said.
All the talk of tax reform without any substantive action from the president, or even so much as an outline from the White House for tax policy proposals, has tempered the sanguine disposition that businesses had at the start of the year, experts say.
"There is a window in which tax reform can be taken up and that window will close once we get into the election season next year for midterm. I would expect that they have to get something done by the early part of next year or everything might start to get derailed," David Blair, an attorney and chair of Crowell & Moring LLP's tax group, said.
Months after Trump promised a phenomenal tax plan, the White House's direction on tax reform is wholly unclear, with mixed messages coming from administration officials. Trump himself has wavered on the centerpiece, and the most controversial part, of the House Republicans' blueprint for tax reform, to not tax exports, while disallowing deductions for import expenses. The proposal is commonly known as the Border Adjusted Tax. Trump has said that he simply does not like the word "adjustment" and equates it to America losing in the trade game.
Trump could very well ultimately come out with a recalibrated version of the BAT proposal. Tax cuts and a plan to encourage businesses to repatriate their offshore earnings are among the other tax policy proposals he has remained firm on. However, the specifics of how he would achieve these goals are still unknown.
He has also indicated that he prefers a straightforward tariff on imports at the border to a policy change embedded in the tax code.
Trump's comments have experts scratching their heads trying to figure out if the president merely has a branding issue with the BAT or if he has more substantial policy arguments against the BAT which would meet his goal to incentivize domestic manufacturing.
Trump could very well ultimately come out with a recalibrated version of the BAT proposal. Tax cuts and a plan to encourage businesses to repatriate their offshore earnings are among the other tax policy proposals he has remained firm on. However, the specifics of how he would achieve these goals are still unknown.
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Read more at: Tax Times blog
