Is Tax Reform Coming in 2017?

6/21/17 At yesterday’s meeting of The Presidents Forum, Anthony L’Altrelli, Partner at Withum talked about tax reform. The last tax reform was 31 years ago in 1986. The one before that was in 1954, 32 years before the 1986 Act. So it seems the time is right for tax reform. The President issued a one page “Goals For Tax Reform” based on his campaign promises of tax relief for American Families and Businesses that includes a territorial tax system. Three members of congress also submitted their own separate tax reform proposals:  Ryan, Hatch and Camp. Three significant items for individuals under Trump’s plan are:
  • A reduction from 7 to 3 tax brackets of 10%, 25% and 35%
  • An elimination of the state and local taxes and property tax deduction
  • A doubling of the standard deduction but elimination of the personal exemptions
The big question for L’Altrelli was his opinion on the possibility of Tax Reform happening this year and will it be retro-active to the beginning of the year. L’Altrelli told us the 1986 Tax Reform Bill was two years in the making. If reform is to be as significant as the proposals recommend, it is likely to happen late this year or into next year. Especially, if the territorial tax system is included. Effective dates could be staggered with individual changes now and corporate changes later. The problem becomes tax planning. L’Altrelli mentioned that last year’s planning had individuals moving income and expense between years anticipating tax reductions this year. We may be doing the same thing again in December this year.

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