At the end of September, Donald Trump proposed a sweeping array of tax cuts for individuals and businesses—he called them “revolutionary change” and the New York Times called them “the most sweeping tax overhaul in decades.”
Details have been scant, and Congress has been left to do much of the heavy lifting. For individuals, the existing seven tax brackets would be winnowed to three, and middle class taxes would be cut thanks to a doubling of the standard deduction, while the alternative minimum tax and the state tax would be kicked to the curb. Trump proposed cutting corporate taxes from 35 percent to 15 percent (a recent congressional draft upped that to 20 percent), though so-called pass-through businesses would see a tax rate of 25 percent. “This will be the lowest top marginal income tax rate for small and midsize businesses in this country in more than 80 years,” Trump said while unveiling the plan.
Tax Relief—But ‘If’ and ‘When’ Loom Large
But as with many things Trump, there is considerable uncertainty surrounding the specter of a tax overhaul, chief among them being if it will even occur.
“Though congressional Republicans are saying tax reform will be ‘easier’ than health care, the party is already embroiled in an intraparty struggle over how deeply to cut rates—and how to pay for them,” Vox reported. “And despite months of negotiations between top House and Senate Congress members and members of Trump’s administration—a working group dubbed the “Big Six”—Republicans haven’t actually agreed on many important points. And what they have agreed on has already raised some eyebrows within the Republicans conference.”
Republicans must first pass a budget, then overcome key policy disagreements, write a plan, debate it (and do so after a Congressional Budget Office score of the bill), and get it through the Senate’s budget rules. Oh—and they have until the end of the year to do so. So far, the Senate has passed a budget and its plan is now before the House. Still, there are plenty of tax plan skeptics.
“The idea of getting tax reform done this year is a farcical fantasy,” Isaac Boltansky, an analyst at the research firm Compass Point, told Business Insider. “Lawmakers have neither the time nor the capacity to formulate and clear a tax reform package in 2017.”
Investor analysts Motley Fool also think something happening this year is unlikely. “Passing tax reform legislation will undoubtedly require a great deal of debate and compromise in Congress, so it’s unlikely that this legislation will pass in time for it to apply to the 2017 tax year,” the website opined. “But when it does pass, it seems likely that it will impose some major changes on the tax code.”
Enlist a Pro to Stay In the Know
Trump’s tax plan is not the only headline that could impact your preparation of taxes for this year—there’s also uncertainty about the Affordable Care Act and other legislation on tap for the end of the year. Tax attorney Arthur Werner walks CPAs and EAs through all this and more in his two-day seminar for Eli Financial, “2017 Federal Income tax Update: Preparing for 2018 and Beyond.” The event will cover dependents, alimony, property settlement, death, retirement plans, required minimum distributions, and more.
To join the conference or see a replay, order a DVD or transcript, or read more