The differences between the tax reform provisions of the House and the Senate are not significant as these things go.
Reconciliation between them is merely a matter of agreeing to split the fairly small differences between motivated Republicans.
The Trump tax reform, despite being limited because of the Senate’s Byrd Rule and the filibuster rule, on-balance accomplishes important long-overdue fundamental course corrections in the federal income and estate tax law.
It’s a significant and positive step forward for the American economy.
The response of the Democrats and the mainstream media is devoted to creating counter-productive political fear and divisiveness.
The Trump tax reform places its primary emphasis on capital going for private sector business expansion and job creation rather than being taxed and wasted on government pork projects.
Changes in the international tax rules aim at encouraging trillions of dollars trapped offshore by multinational companies large and small to flow back into the United States.
Getting a trillion dollars invested back into the United States for capital investment, savings, and consumption is a sure-fire method to rev-up the economy.
A one-time low repatriation tax charge, changing to a territorial tax system, a 20% corporate tax rate, an ability to deduct dividends, and other rules, could well relegate offshore tax haven machinations to the back burner.
Which simultaneously enhances the United States financial position as the premier wealth haven in the world.
Small businesses, the biggest generators of jobs, are invariably formed as pass-through entities like LLCs, sub-S corps, or partnerships. The new tax regime will give them a big boast also.
A much-needed full expensing of machinery and equipment encourages small businesses to acquire more tools needed to increase productivity.
A desirable change which will simplify accounting life for firms doing up to $25 million will allow the option for these small businesses to choose the cash method of accounting.
Sometimes businesses suffer losses instead of making profits. The net operating loss rules are adjusted to allow indefinite NOL carryforwards although losing the limited ability to carryback NOLs.
The changes to the estate tax mean that nearly 99% of the estates will be estate tax free. The House version has full repeal in six years.
The alternative minimum tax is still up in the air. The Senate version repeals the ATM for both individuals and corporations while the House version merely increases the exemption amount.
Like every piece of tax legislation, this tax reform effort is complicated and, for most, incomprehensible. Most taxpayers come out ahead, some don’t.
A good bill for tax lawyers, accountants, and politicians.
Despite the legislative limitations of the Senate’s byzantine legislative rules, and nearly demonic Democratic obstructionism, the Republicans moved the Trump tax agenda forward to make America great again.
It was a hard-fought political battle, but Trump’s tax reform for business comes out a winner.
Denis Kleinfeld is known as a strategic tax and wealth protection lawyer, widely published author and creative teacher.
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