Tax reform proceeds to possible summer enactment

Lawmakers continue to debate comprehensive tax reform, aiming for a package to clear Congress and signed into law by the President before summer. At the same time a “mini” tax reform package in an Affordable Care Act (ACA) repeal and replacement plan appears to have stalled in Congress.

Tax reform

Tax reform for individuals and businesses is being driven by two proposals: ones made by President Trump during the campaign last year and ones set out by the House GOP (known as the GOP blueprint). In many areas, the two find common ground, including consolidation and a reduction in the income tax rates for individuals, a cut in the corporate tax rate, elimination of the federal estate tax, and abolishment of the alternative minimum tax (AMT). President Trump has also called for new tax incentives for child and elder care.

The chief tax writer in the House, Rep. Kevin Brady, R-Texas, has predicted that a comprehensive tax reform package will pass the House before summer. The top tax writer in the Senate, Orrin Hatch, R-Utah, has indicated that the Senate Finance Committee, which he chairs, is likely to develop its own tax proposals. Senate Majority Leader Mitch McConnell, R-Ky., has said that the pace of tax reform in the Senate will depend on the make-up of the House’s tax package.

Closely-related to tax reform is infrastructure spending. In January, President Trump called on Congress to support a $1 trillion spending initiative for highways, bridges, and other developments. White House officials indicated that tax credits of some type would be part of the proposal. In March, a senior GOP lawmaker indicated that infrastructure spending could be part of a federal aviation bill this year. Infrastructure spending is an area where there may be bipartisan support.

Health care

At the eleventh hour, House republicans pulled their ACA repeal and replacement plan (the American Health Care Act (ACHA)) from the House floor. The ACHA would have repealed the ACA’s tax measures including the,

  • Net investment income (NII) tax
  • Additional Medicare tax
  • Excise tax on certain medical devices
  • Excise tax on tanning services

The excise tax on high-dollar health insurance plans (also known as the “Cadillac plan” tax) would have been delayed. The medical expense deduction would have been returned to its pre-ACA parameters. In place of the premium assistance tax credit, the ACHA would have provided a new tax credit generally based on an individual’s age.

For now, ACA repeal and replacement appears to have been moved to the back burner in the House. The statute remains in place. There could, however, be some changes to regulations under the ACA.

If you have any questions about tax reform, health care reform or any federal legislative developments, please contact our office.

Written by

Steve Moss, CPA is a partner at Holden Moss CPAs and loves helping businesses and their owners grow to be the very best they can be. Our other offices include Raleigh, Oxford and Warrenton.

We are a little different at Holden Moss CPAs. While we still provide traditional tax and accounting services, years ago we realized many clients wanted help in running their businesses and were hungry for ideas, solutions, strategy, and execution. In response, we expanded our skill set and joined Ran One, a global network of business consulting firms. Our membership with Ran One gives us access to proprietary resources and analytical software to help our clients grow, become more profitable and valuable, and have the lifestyle they desire.

Now, blended into the fabric of our normal tax and accounting needs, we are focused on our clients’ businesses in a very different way. While our approach is not right for everyone, for those whom it is, incredible results may be obtained. Whether you have a new, or established, business, or for those in transition of selling or retiring, or for those who simply need to develop an exit strategy or succession plan, our unique approach to client service may be the edge you need.

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