On September 27, 2017, the Trump Administration released the long-awaited tax plan, the Unified Framework for Fixing Our Broken Tax Code.
In touting the plan, the President asserted that his “plan is for the working people . . . and I think very, very strongly, there’s very little benefit for people of wealth.” Some have suggested that might not be the case.
The plan laid out four principles for tax reform:
First, make the tax code simple, fair and easy to understand. Second, give American workers a pay raise by allowing them to keep more of their hard-earned paychecks. Third, make America the jobs magnet of the world by leveling the playing field for American businesses and workers. Finally, bring back trillions of dollars that are currently kept offshore to reinvest in the American economy.
Significantly for our clients in New York and New Jersey, the plan seeks to pay for certain tax cuts by eliminating the state and local tax deduction. There has been some push back on that proposal due to the disproportionate impact on taxpayers in the northeast.
The other major proposal for our practice is the elimination of the estate tax and the generation-skipping transfer tax. This proposal is comprised of a single line in the plan. It is unclear at this time if the ultimate bill that comes out of Congress will replace the estate tax with a capital gain tax. This was the approach taken with the Economic Growth and Tax Relief Reconciliation Act of 2001 which expired in 2010.
I recently attended a presentation by a senior member of the IRS’s tax policy unit. She conceded she had given up on predicting what will come out of Congress. So in the meantime, we all (including the IRS) will have to wait and see.