Tax reform will be a slow process (no surprise)
October 13, 2017 - Posted by: admin - In category:
Senator Ted Cruz has given fair warning that tax reform may not be coming quite as quickly President Trump wants, and some earlier reports indicated. The word out of Washington today is that Cruz believes that new tax reform legislation will get done “late this year or early next year.” We know that it’s not going to happen this week, next week or even this month (at least we can be reasonably confident in those prognostications).
The White House has already started to hedge its bets and give indications that repeal of the estate tax is not a deal-breaker for President Trump. Was repeal of the estate tax and GST just a calculated proposal for future bargaining in the first place? No, given that Trump has billionaire status, I’m sure that he and the rest of the Trump clan would be pleased to repeal the federal “death tax.” Even so, in the overall scheme of things, the estate tax is a minor piece of the tax reform puzzle. That is, estate tax revenues for the treasury are quite insignificant in the overall picture. At the same time, estate tax, a/k/a “death tax” does get a lot of clicks and attention. This is probably due to the general misunderstanding about the limited applicability of federal estate tax to the average American household.
So with all of this back-peddling and hedging of bets, what should you and I expect regarding the timing and substance of tax reform? Is it going to happen or will it eventually suffer the same fate as the “repeal and replace Obamacare” efforts (i.e. failure)? We are still very early in the process–what appears to be a long and challenging process. Rational folks never expected that this would happen as easily or quickly as POTUS made it sound at the beginning.
Cruz wants more than $1.5 trillion in tax cuts; Trump wants postcard tax filing simplicity and a host of other “reforms.” The Democrats seemingly want none of the above and are likely to resist every one of these efforts from the Republicans and the White House (just in the spirit of playing political games). The repeal of the estate tax and GST might happen, but it would seem that those items will be the first to go in the negotiation process. In short, there is a LOT of work to be done, details to be worked out and compromises to be reached if the long-promised “tax reform” legislation ever sees the light of day (and the pen of POTUS).
Stay tuned. There will almost certainly be many more shifts and course changes before this is done.