The House passed the final version of the Republican tax reform. President Donald Trump’s signature on the bill is expected in the next few days. The new tax system could go into effect in just 12 days, creating confusion for payroll companies, tax accountants and lawyers, as well as the Internal Revenue Service. The IRS and the Treasury Department will have to swing into action to draft new regulations to put the new law into effect, which governs everything ranging from tax regimes for businesses that do not organize as corporations to university endowments. Also affected are multinational corporations how they will be taxed on the profits earned outside of the United States.
At the White House on Wednesday, President Donald Trump applauded the tax overhaul, saying "we broke every record." The president was flanked by Republicans outside of the White House just after the House finished its re-vote to pass the $1.5 trillion bill. Saying that the run-up to the bill’s passage had "been an amazing experience," Trump said it was "the largest tax cut in the history of our country."
Most taxpayers will get a tax cut next year under the plan, but those who are thinking about selling real estate or other capital assets, paying property taxes, or incorporating businesses will have to quickly calculate whether these actions will cost them more or less in 2018.
Republicans will not be able to count on help from disgruntled Democrats should any problems or mistakes in the newly-passed legislation emerge. “If they do pass the bill, they lose with the American people,” House Minority Leader Nancy Pelosi of California predicted a Democrat take-over of Congress, and said, “Because even when we do win, to undo this will cost a fortune.”
Some complex aspects of the new rules may take several years for IRS and the Treasury Department to write. Among them are rules mandating relief for pass-through businesses, as well as taxing offshore business profits. Additionally, Republicans will have to address temporary provisions in the bill that end tax relief for individuals after eight years.
Taxpayers in high-tax states such as California, New Jersey, Connecticut, and New York are burning up the phone lines at state and local government offices as they seek to know if they can seek extra relief ahead of a new cap on the state and local tax deduction that will go into effect on Jan. 1. Under the new rules, taxpayers may deduct only up to $10,000 in both property and income or sales taxes going forward. Also, taxpayers are specifically banned from prepaying 2018 income taxes this year for an extra tax break. However, the final version of the bill allows taking a deduction this year for prepaying property taxes. However, accountants in California, New Jersey, and New York are saying that such a move will not be able to do in some places.
The Republican tax plan’s individual tax relief expires at the end of 2025, which critics say can resurrect that fiscal crisis of 2012. Republicans are confident that this can be avoided. "We have every intent of making those permanent,” House Speaker Paul Ryan said on Tuesday.
Following the votes on Wednesday, President Trump wrote at Twitter: "I would like to congratulate Senate Majority Leader Mitch McConnell on having done a fantastic job both strategically and politically on the passing in the Senate of the MASSIVE TAX CUT & Reform Bill. I could have not asked for a better or more talented partner. Our team will go onto many more VICTORIES!." In another Twitter missive, the president wrote: "The Tax Cuts are so large and so meaningful, and yet the Fake News is working overtime to follow the lead of their friends, the defeated Dems, and only demean. This is truly a case where the results will speak for themselves, starting very soon. Jobs, Jobs, Jobs!"
Apparently prompted by the tax reform measure, AT&T CEO Randall Stephenson said on Wednesday that the corporate giant plans to give each of its 200,000 employees a Christmas bonus of $1,000 each.
When contacted by Spero News, Steve Hays -- the chairman of Americans for Fair Taxation -- observed on Tuesday before the final version of the bill passed muster in Congress,"This is not real reform but ensures that the over 50% of the nation’s lobbyists who worked on this bill will have plenty of work to do in the future. The Swamp took care of the Swamp and the rest of us will have to suffer with a crazy system that is still full of special interest benefits." On Wednesday, after the Republicans declared victory, Hays responded, "My only further thought is that this fake reform delays real tax reform until after the 2018 election cycle." Hays' organization favors the elimination of the IRS and income tax, replacing it with a national sales tax. A so-called "pre-bate" to all legal taxpayers would ensure lower-income individuals and families would not be unduly affected.
Together, we are MAKING AMERICA GREAT AGAIN! pic.twitter.com/47k9i4p3J2— Donald J. Trump (@realDonaldTrump) December 20, 2017
The United States Senate just passed the biggest in history Tax Cut and Reform Bill. Terrible Individual Mandate (ObamaCare)Repealed. Goes to the House tomorrow morning for final vote. If approved, there will be a News Conference at The White House at approximately 1:00 P.M.— Donald J. Trump (@realDonaldTrump) December 20, 2017