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Posts Tagged ‘tax reform’

First drafts are notoriously difficult. Beethoven’s Fifth initially included an ill-conceived three-minute guitar solo. In his original sketch of the Mona Lisa, da Vinci had her giving the double thumbs-up. And Frances Bellamy’s first run at the Pledge of Allegiance regrettably concluded with the phrase “party on.”

Eventually, all three of these seminal works got it right. And so President Trump shouldn’t feel so bad about missing the mark with his first draft of a tax reform plan. He’s got ample time to turn mess into masterpiece.

That process begins now. Late last week, the Senate passed its budget for the 2018 fiscal year, calling for $1.5 trillion in tax cuts over the next decade. An initial analysis of the plan President Trump released on September 27th, however, revealed that his first stab at tax reform would amount to $2.5 trillion in cuts. And while many might blindly believe that more cuts = better, this excess, as described below, poses no shortage of procedural and political hurdles if not corrected.

So how can the President fix his plan, making it economically feasible and politically palatable? Let’s take a look, beginning with gaining a better understanding of the shortcomings of the current proposal.

Continue reading on, Forbes.com

Authored by Tony Nitti, Withum Partner and writer for Forbes.com.

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On September 27, President Trump and the “Big 6” Republican tax leaders laid out their plan for tax reform. Withum partner and nationally known Forbes columnist Tony Nitti conducted a complimentary one-hour long webinar separating fact from fiction helping listeners understand the proposal and what is slated to change.

If you did not have the opportunity to tune in, you can listen to the podcast by clicking the play button below:

Webinar presented by Tony Nitti, Withum Partner and writer for Forbes.com.

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Yesterday, President Trump and the “Big 6” — Speaker of the House Paul Ryan, Chairman of the House Ways and Means Committee Kevin Brady, Treasury Secretary Steven Mnuchin, Senate Majority Leader Mitch McConnel, National Economic Council Director Gary Cohn, and Senate Finance Chairman Orin Hatch– released the GOP’s latest plan for tax reform. Hours later, the President gave a speech in Indiana to formerly introduce and promote the plan.

Now, some might suggest that the President is often prone to hyperbole. Or half-truths. Or outright lies. I’m not going to opine on that, because the reality is, there are many shades to the truth, and as George Costanza once said, “it’s not a lie if you believe it.”

But this is tax reform we’re talking about; a topic so foreign and frightening to most people that they need an advocate. Someone to parse through the empty rhetoric and leading language and tell them what’s real and what’s not. And when it comes to the President’s speech on tax reform, that someone is me.

So here’s what I’ve done. I’ve copied much of the text from yesterday’s speech below, with all of the President’s words in italics. I haven’t presented the entire speech, of course, because it would run for pages and pages, and also because no one really needs to read the word “tremendous” that many times in one sitting.

After the President’s comments, I have added my commentary, in regular type. My hope is to cut through the sales pitch and give it to you straight, so that you might understand what this plan really means to you and this great country. I hope it helps.

Continue reading on, Forbes.com

Authored by Tony Nitti, Withum Partner and writer for Forbes.com.

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First thing this morning, I was scheduled for an upper endoscopy. As the anesthesiologist prepared to put me under, he asked what I did for a living and I explained that I was a CPA who also writes about tax law, and that today was a critical day in the tax reform process. He then asked me about what I though the GOP’s plan would be, and as I got into the finer points of budget reconciliation, deficit-neutral tax reform, and dynamic scoring, sleep finally set in.

Ok, on to what you came here for. Last week, President Trump, in his preferred manner of speaking in absolutes, said the following when pressed on the pace of tax reform:

We have a tax plan that’s totally finalized.

Earlier today, the President, along with the so-called “Big 6” — Treasury Secretary Steven Mnuchin, Speaker of the House Paul Ryan, Chairman of the House Ways and Means Committee Kevin Brady, National Economic Council Director Gary Cohn, Senate Finance Chairman Orin Hatch, and Senate Majority Leader Mitch McConnell, Republicans all — unveiled their tax plan, and lo and behold, it IS in fact finalized, if by “finalized” you mean, “Seven pages of general highlights and a disturbing absence of detail.”

But hey, don’t be too hard on the Commander in Chief and the Big 6 (excellent band name); after all, tax reform is hard. To illustrate just how hard it is, let’s take a look at the parts of the plan that were made public today, and how each one presents significant challenges, both in regard to being politically palatable and economically feasible.

But first, let’s understand the biggest of all the challenges facing tax reform: fitting $5 trillion in tax cuts into a $1.5 trillion budget.

Continue reading on, Forbes.com

Authored by Tony Nitti, Withum Partner and writer for Forbes.com.

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I wasn’t always like this, I swear. There was a time in my life when if I wanted to satisfy my urge for tinkering, I’d kill a few hours on ESPN’s NBA Trade Machine, trying to determine exactly who my beloved New Jersey Nets would have to give up to acquire a young James Harden. But now…well, now I scratch that same itch by wondering, “Can I devise a revenue-neutral tax reform plan?”

And yes, I am significantly less fun at parties than I used to be.

But before my nerdiness drives you away, consider the importance of my undertaking. A revenue neutral tax plan — one that generates the same amount of tax revenue over the next decade — is the carrot the GOP is chasing. Why? As we’ve discussed in this space before, a tax reform plan — one that cuts rates, simplifies the law, and yes, as mentioned in the previous sentence, results in no net loss of tax dollars — can be passed through what’s called the “budget reconciliation process.”

Under this process, should the House and Senate ever get around to approving budgets that provide for a tax reform plan, that plan could be passed with only a simple 51 majority in the Senate. And because Republicans currently hold 52 seats in the Senate, it means that the GOP could pass its vision of tax reform without a single vote from a Democrat.

The catch, however, is that in order to use the reconciliation process, any bill cannot add to the deficit beyond the ten-year budget window, hence the need for revenue neutral tax reform.

How hard can that be?

Continue reading on, Forbes.com

Authored by Tony Nitti, Withum Partner and writer for Forbes.com.

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After enduring the healthcare debacle, Charlottesville nightmare, and a seemingly endless string of natural disasters, the White House is desperate for some good PR, and revamping the nation’s tax law is where it aims to find it.

Over the past year, many promises have been made and modified, proposals floated and abandoned, and timelines established and extended. And while I’d like nothing more than to use this space to get you caught up on the details of where we stand today — projected tax rates, a review of what deductions will be eliminated or survive, etc… — the reality is, those details simply don’t exist. In fact, we know far less today about what tax reform might look like than we did seven or eight months ago.

So instead, I’d like to take a look at the big picture: what are the five biggest questions that must be answered before the GOP can fulfill one of its biggest promises to the American public: a more simple, more fair tax system that leaves additional cash in the hands of businesses and families? Let’s take a look.

Continue reading on, Forbes.com

Authored by Tony Nitti, Withum Partner and writer for Forbes.com.

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What a rip-off. This was supposed to be my fifteen minutes. The summer of 2017 was when the discussion surrounding tax reform was going to dominate the airwaves, newswires and internet, with every TV station, publication and web site coming to me for my opinion on the pros and cons of potential changes. And I was going to shine.

But none of that materialized. Instead, tax reform has been largely forgotten, as the legislative progress has been stopped in its tracks by the never-ending, irreconcilable argument over Obamacare and, more recently, some potential light treason.

But yesterday, the veritable eggheads at the Tax Policy Center snapped me out of my summer doldrums and brought tax policy back to the forefront of the social consciousness by publishing its analysis of President Trump’s most recent tax plan. And it’s nothing if not revealing.

Continue reading on Forbes.com

Authored by Tony Nitti, Withum Partner and writer for Forbes.com.

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