Over the next few months you are going to be reading and hearing a lot about potential tax law changes that are being recommended by the new administration. The purpose of this article is to look into the future and determine what the tax landscape might look like by reviewing the tax proposals of President-Elect Donald Trump and also a tax proposals from Speaker of the House Paul Ryan.
Before we get into reviewing potential tax law changes, let’s step back and review the life cycle of a tax bill. The part of the government that deals with the introduction of all tax bills is the House of Representatives. All of the bills are drafted and reviewed by legislative committees to include the House Ways and Means Committee.
Once a bill has passed the House of Representatives, which requires majority vote, it is sent to the Senate for consideration. In the Senate the bill is reviewed by tax legislation and finance committees.
Once the billed has passed the Senate, which also requires a majority vote, it is sent to the President for his signature.
With tax law first being introduced by the House of Representatives, most observers feel that attention needs to be directed not only toward the Trump tax proposals but also those that have been put forth by Speaker of the House Ryan.
The best way to compare and contrast the tax polices of both President-Elect Trump (Revised Plan) and Speaker of the House Ryan is to put them side by side. Please see the attached chart, here.
As can be seen by the comparison, the following can be surmised with respect to potential tax law changes. The provisions below are where the Trump plan and the Ryan plan are in unison:
- Reduction in individual income tax rates
- Elimination of individual alternative minimum tax
- Elimination of estate tax and generation-skipping tax
- Elimination of the 3.8% medicare tax on net investment income
- Increased standard deductions
- Elimination of personal exemptions
- Cap on itemized deductions
- Reduction in corporate income tax rates
- Elimination of corporate alternative minimum tax
- Revised expensing rules (depreciation and interest expense) for businesses
- One-time tax on expatriated profits returned to the United States
It is not known the timing of any new tax legislation or what the effective dates would be, if enacted. Whatever lies ahead your advisors at BiggsKofford will keep you abreast of changes that will impact you and your business.
Gregory L. Gandy, CPA
Tax Director, BiggsKofford