Dozens Of Tax Proposals Under Consideration

The Budget Committee of The House sent a memorandum to the House Republican Caucus detailing all of the tax proposals currently under consideration for the expected Budget Reconciliation Bill. The list of proposals is 50 pages long and exhaustive in nature.

Most news outlets have been reporting that the process is mired down in endless details. Others are saying that no one has any idea where this will ultimately land because many of the proposals are mutually exclusive.

But no one seems to be going into the specifics about what is actually being considered. So the following is an abbreviated list of the proposals.

It is by no means comprehensive. I’ve edited through the document to pull out the ones that might be more relevant to my readership.

But in going through these, you might get an idea where our elected officials collective heads are at. And in doing so, you might get some ideas about how to manage your businesses through the next four years of the new administration.

Those proposals include…

1 – A “Border Adjustment Tax” that would “create a new tax on goods where they are consumed, not purchased” resulting in a “shift from an origin-based tax to a destination-based tax.

2 – Create a 10% across the board tariff on all imports.

3 – Lower the corporate income tax rate to 15%.

4 – Lower the corporate income tax rate to 20%.

5 – Repeal the 15% corporate alternative minimum tax.

6 – Return to immediate expensing of research and development) costs, which under the TCJA are required to be amortized.

7 – Repeal of “Green Energy” tax credits “created and expanded” under the Inflation Reduction Act .

8 – Eliminate the exclusion of interest on municipal bonds.

9 – Under the TCJA, the SALT “State and Local Taxes)deduction is limited to $10,000 per taxpayer, and married persons filing jointly are subject to the same $10,000 limitation as a single filer. The memorandum lists five alternative approaches to SALT.

a – Make the TCJA $10,000 limitation permanent but double the limitation (to $20,000) for “married couples”.

b – Make the general provisions of the TCJA provision permanent, but increase the thresholds to $15,000 for individuals and $30,000 for married couples.

c – Eliminate the deductibility of state and local income or sales taxes, but preserve the deductibility of property taxes. In this proposal, the TCJA $10,000 limitation would be allowed to expire in 2025.

d – Eliminate the SALT deduction for businesses (presumably including eliminating the pass-through entity tax (“PTET”) workaround), and the individual SALT deduction would be “unchanged from current law.”

e – Repeal the SALT deduction, in its entirety, for both individuals and businesses (presumably including eliminating the PTET workaround).

10 – Entirely eliminate the federal estate tax.

11 – Fully repeal the home mortgage interest tax deduction.

12 – Lower the home mortgage interest deduction cap from the TCJA level of $750,000 to $500,000.

13 – Permit a deduction for auto loan interest payments.

14 – Eliminate the deductibility of interest on student loans.

15 – Eliminate the income tax on tips, which are currently subject to income and payroll taxes.

16 – Create a “blanket exemption” on the taxation of “overtime earnings.”

17 – Repeal remaining increased IRS funding from the Inflation Reduction Act.

Let me leave you with this…

I cut out about half of the proposals given the fact that many of them would have little of no effect on my readership. But looking at these details brings a general problem into specific relief.

They’re going in every direction possible. As such, this is going to be a long and ridiculously tedious process where no individual group wins or loses.

Let’s remember that the GOP only has a 4 or 5 seat majority depending on how you count it. As such, any individual lawmaking can act like God holding the whole thing up to make demands for their individual pet projects or needs.

This will be a nightmare of gargantuan proportions. I wouldn’t want to be anywhere near the House or Senate Leadership at this point.

Just going through the list makes me want to mix a Martini, a Martwoni, or maybe even a Marthreeni.

This also tells me that if they can get anything passed at all, there’s going to be a ton of tax law changes this year. I’ll keep you posted.

We’re all going to get through this. Let’s get through it together.
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