After one of the most memorable and acrimonious presidential campaigns in American history, Donald Trump stunned observers by defeating Hillary Clinton to be elected the 45th President of the United States. Additionally, the Republican Party maintained control of both the House and the Senate.
This combination will give Mr. Trump and a Republican Congress a unique opportunity to shape many areas of policy, such as health care, regulatory reform, defense spending, immigration and more. However, near the top of that list will almost certainly be taxes. In recent months, both Trump and House Republicans have made significant proposals around taxes and tax reform. As the 30th anniversary of the landmark Tax Reform Act of 1986 was just observed, calls for tax simplification have also increased.
In general, Trump's proposals were less specific than those of the House's "Better Way" tax reform blueprint issued last summer. However, given the significant overlap, it appears that the House plan may be used as the starting point in January.
This notion is bolstered by the idea that new Vice President-elect Mike Pence will be Trump's primary go-between with congressional leaders. Pence himself is a former member of the House leadership and has a strong relationship with Speaker Paul Ryan. He could prove to be one of the most consequential Vice Presidents in American history as he helps shape and manage Trump's legislative agenda.
Work will start in earnest early in 2017. Among tax proposals for individuals would be the following highlights:
Among the business/corporate tax provisions would be the following:
Combined, these proposals would create substantial additions to annual deficits and the national debt. Offsets are limited to unspecified loopholes that benefit special interests and the effects of GDP growth on tax revenues.
Accordingly, much work will be needed on all of these proposals, and the finished product could look quite different. However, the likelihood of broad-based tax reform, combined with substantial rate reductions in 2017 is the best it's been in many years.
As more details emerge, we will be following these items closely, and we will keep you - our valued clients and friends—proactively informed.
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