October Government Updates: Tax Reforms

Republicans Release Tax Reform Framework

On September 25, the Trump Administration, House Committee on Ways and Means, and Senate Committee on Finance released a framework that would make major changes to the federal tax code. The House of Representatives approved a budget resolution in October that would allow any tax cuts to increase the federal deficit by up to $1.5 trillion over 10 years. The Senate is expected to vote on the budget resolution the week of October 16.

Congressional Republicans are expected to use the budget reconciliation process as the legislative vehicle for tax reform. That would permit the Senate to bypass certain procedural hurdles and allow a simple majority to approve a tax overhaul package.

Click here to Unified Framework for Fixing Our Broken Tax Code.

Controversial Change to Estate Tax Law is Withdrawn

On October 4, the Treasury Department and Internal Revenue Service (IRS) formally withdrew a proposed rule that would have curbed valuation discounts and meant increased estate taxes on the deaths of family business owners.

In August 2016, under the Obama Administration, the Treasury Department proposed a change to section 2704(b) of the Internal Revenue Code removing legitimate valuation discounts for estate, gift, and generation skipping taxes that businesses have used for the past two decades in order to prevent the IRS from overvaluing their businesses at death.

Withdrawal of these regulations is a significant victory for small businesses ($18 Billion according to President Obama’s FY13 Budget) as the push to repeal the estate tax continues.