December 4, 2017
Early Saturday morning the Senate passed a major tax reform package 51-49 with all but one Republican(Sen Bob Corker) voting for it and all Democrats voting against. There was a few changes made to the original senate version such as preserving the alternative minimum tax and a higher deduction from 17% to 23% for pass through entities.The process to get a final bill into law still has a ways to go but now appears more likely. Both the Senate and House have now passed similar tax reform plans but they will need to reconcile these competing versions in order to get a final deal done. However time is short as Congress is scheduled to adjourn for its Christmas break on December 15th. Stay tuned!
November 20, 2017
After months of rumors and fanfare about tax reform, both the House and Senate finally released their proposals. The twin reform proposals are very similar as they primarily cut income tax rates for businesses and most individuals. Both plans also eliminate or reduce the estate and gift tax but pay for these tax reductions by eliminating or reducing many popular income tax deductions for individuals.
The House passed its version 227-205 on November 16, 2017, while the Senate vote will likely be deferred until after Thanksgiving. While the House and Senate proposals contain many of the same reform provisions, they do still differ in several significant respects. Therefore, we can’t take these proposals as gospel since there is a long process ahead with many anticipated changes before year-end. We do expect passage of a bill, most likely in early 2018, despite efforts to get something passed before year-end. Stay up-to-date with all the developments.
In any event, most of the new tax reform rules, once passed, will be effective in 2018 and, perhaps, could be phased in over time. A big sticking point to passage might be the impact on the federal deficit. It seems doubtful that increased economic growth will completely offset the reduction in revenue from the $1.5 trillion in tax cuts. In the coming weeks, we will see which proposals survive as Congress moves toward votes on these bills. In the meantime, some of the key tax reform proposals for business include:
Some of the key tax reform proposals for individuals include: