As Americans file their federal tax returns Tuesday, the prospects for comprehensive tax reform seem to be slipping further into an uncertain future.
Treasury Secretary Steven Mnuchin told the Financial Times that Republicans will likely miss an August deadline for tax reform because of the delay of health care reform. However, he still believes it will pass by year's end.
President Trump promised to lower tax rates for both business and individuals during his first year in office. And it’s something Houston CPA Randy Reimer, of Reimer, McGuinness and Associates, says his clients are looking forward to.
“A high bracket of 35 percent versus the 39.6 percent top bracket we have now,” he says. “There's also phase outs of your exemptions and your itemized deductions as your income is higher.”
Tax reform is of particular concern for businesses.
“There are decisions that get made based on the taxability of a transaction,” says Reimer. “If clients delay making equipment purchases that help industry and help jobs, if there's no tax break for those, they may not make that purchase.”
“The major tax burden is on the top 20 percent of income earners in the country, the bottom half is paying virtually zero income tax,” he says. “I thinks some spread of that at the lower levels would be helpful, but there's no doubt the guys at the top are either going to pay tax or buy equipment, or hire some more people.”