Last week the Trump administration and Republican Congressional leaders released the aforementioned “Unified Framework.” After taking a tour through the magical, “giant, beautiful, massive” (according to the Exaggerator-in-Chief) tax-cutting Framework, I find that what is unified is a mystery. (Sorry, Mr. McCartney and the late Mr. Lennon.)
The Framework outlines, without reference to many numbers and with precious few specifics, over twenty disparate changes in the tax code. The Framework suggests that the tax-writing committees of Congress will come up with the specifics and some additional ideas. The Framework does not explain how the Federal government’s bills will be paid with less money coming in; there are only a few significant revenue generators proposed. There are optimistic general aspirations that corporations will bring operations, money and employees back to the good old U.S.A., answering the siren call of lower tax rates and some vaguely-defined incentives for repatriation of funds.
One of the implied proposals is the elimination of the individual itemized deduction for state and local taxes. Within moments after the release of the Framework, the Republican Unifiers got pushback from some of the biggest states that happen to have high state income tax rates. Leading the protests were Republican members of Congress of those states and the precious few Republican government executives of those states.
A lot of oxen are being gored. Many of those bovines have powerful and plentiful lobbyists in Washington. There will be battles on many fronts.
So, what kind of tax planning do I think my clients should currently undertake? Well, that’s not a fair question. It is bit like asking a sports reporter to turn in his coverage of a football game before the contest even starts. I may have some opinions, but they don’t mean much in light of the future brawls in the halls of Congress. When the winners begin to emerge, I’ll start tax planning.