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Federal tax reform remains a discussion, not a reality

08/16/2017

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The “Big 6” released a joint statement on federal tax reform on July 27, 2017. Members of the Big 6 are Treasury Secretary Steven T. Mnuchin, Speaker of the House Paul Ryan, Senate Majority Leader Mitch McConnell, Senate Finance Committee Chairman Orrin Hatch, House Ways and Means Committee Chairman Kevin Brady, and National Economic Council Director Gary Cohn.

According to the statement, the Big 6 have a “shared vision” for tax reform and are prepared to work together to produce legislation that the President could sign.

The shared vision includes:

  • Tax relief for American families
  • Lowering the tax rate for small businesses so that they can compete with larger ones
  • Lowering tax rates for all American businesses so that they can compete with foreign ones
  • Reducing tax rates as much as possible overall
  • Allowing unprecedented capital expensing (placing a priority on permanence)
  • Creating a system that encourages companies to bring back jobs and profits trapped overseas

Perhaps the two biggest factors addressed by the joint statement are:

  1. The shared vision is believed to be possible without adopting a new domestic consumption-based tax system.
  2. The Border Adjustability Tax is no longer on the table or part of tax reform discussions.

Unfortunately, the statement does not provide any insight on the actual details of tax reform or how tax reform would be paid for. Consequently, tax reform remains a discussion and not a reality.

According to the statement, the Big 6 expect legislation to move through committees this fall.

Stay tuned.

Posted in: Financial Solutions, Tax
Tagged with: Business Tax