We are closely watching Congress for a new tax reform bill and for changes to a health care bill, which would also have tax implications.
House Speaker Paul Ryan recently stated in a speech that tax reform talks among the so-called “Big Six” are nearing a consensus. He mentioned specifically that business tax reform would include accelerated expensing. Also, Ryan stated that a reduction of the corporate tax rate to 20% is “very realistic.”
The “Big Six” includes Paul Ryan, Senate Majority Leader Mitch McConnell (R-KY), Treasury Secretary Steven Mnuchin, White House adviser Gary Cohn, House Ways & Means Committee Chairman Kevin Brady (R-TX), and Senate Finance Committee Chairman Orrin Hatch (R-UT).
These six officials are reportedly trying to reach agreement on tax reform in closed-door discussions aimed at producing legislation in September (presumably to go into effect for the 2018 tax year).
Ryan said tax reform would include:
Accelerated business expensing
Doubling the standard deduction for individuals
Retaining popular deductions for charity donations, home mortgages, and retirement
He has also indicated before that tax reform should include a shift to the territorial system. That would mean that U.S. multinational corporations would no longer be subjected to U.S. tax on their foreign profits.
Administration officials have said that negotiators realize that President Trump's proposed 15% corporate rate is unlikely without expanding the federal deficit, which Republican leaders in the House and Senate are unlikely to allow. Brady recently told reporters that tax reform would be “truly deficit neutral.”
We will continue to watch to see if any of this actually happens and will let you know more as we see details.
Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein