Over the last 100 days, we have seen our new President push for many things in any number of directions. The repositioning of certain postures taken during the campaign has ranged from slight to drastic. This in consideration, one word to best sum up the actions of the current administration might be “unpredictable.”
The Republican Party currently controls the executive and legislative branches of government and has long taken issue with current tax law. With both the means and impetus to achieve meaningful tax reform, the stage was set for quick and sweeping changes to the U.S. tax code. Many experts were predicting just that: a tax overhaul, effective January 1, 2017.
Last week, the Trump administration, through Treasury Secretary Mnuchin and National Economic Director Cohn, reaffirmed its intent to reform the U.S. tax code. The stated purpose of the plan is to lighten the financial burden of U.S. taxpayers, promote economic growth, and simplify compliance… and not add to the deficit. In a word: Huge.
The plan has been called many things by pundits and news organizations, ranging from “a disaster” to “the savior” of the administration. The White House describes it as “the biggest cut ever” and “phenomenal.” Many arguments have been presented over the potential fallout of such reform, as citizens try to predict:
- Will this increase the deficit?
- Will the tax cuts make up for the difference in tax revenue on their own by stimulating economic growth?
- Who will benefit most—the wealthy, the poor, me (one can only hope)?
- Can’t we please forget about the AMT?
- And of course, will the reform disproportionately help the President’s personal tax burden?
Unfortunately, those questions will continue to go largely unanswered. The full nature and impact of Trump’s tax reform policy is still hard to ascertain. Very little in the way of detail has been given to the major bullet points of the plan – in fact, the proposal presented last Wednesday was only one page in length and lacked any true elaboration.
To the administration’s credit, their position on tax reform has not changed drastically from what was put forth on the campaign trail (read about that here); however, the message needs to be clarified to sufficiently inform the American people. Seeking that clarity, most have looked to the conservative tax blueprint drawn up by Kevin Brady and Paul Ryan, but we have already seen the President and others in the party sour to that plan, specifically the border adjustment tax proposed therein.
In spite of the 100-day timeframe, it is still impossible to gauge Trump’s tax reform policy with any degree of accuracy. Perhaps the next 100 days will bring potential tax reform into better focus, but many of the experts I mentioned earlier are pushing expectation of anticipated tax reform back to 2018. Additionally, in-fighting among factions of the GOP could delay new law for even longer than that.
For now, we will all have to deal with the Code as it is and wait anxiously to see if any changes are in store for the future. Sad.
Evan Piccirillo, CPA is a Tax Supervisor in Raich Ende Malter & Co. LLP’s Long Island office. Evan specializes in high net worth individuals, as well as closely-held corporations, S-Corporations, and small businesses.
Contact Evan at email@example.com or (516) 228-9000.