Federal Tax Reform Debuts: Assessing potential implications and strategies for financial institutions
As Seen in Banking Exchange, January, 22, 2018
The last major change to America’s tax code occurred nearly 30 years ago, when President Ronald Reagan signed the 1986 Tax Reform Act into law. Much like the current Tax Cuts and Jobs Act (TCJA), the bill was intended to simplify the income tax code and eliminate numerous tax shelters for the wealthy. Since then, however, the tax code expanded from less than 30,000 pages to more than 70,000, as continual updates and changes were made by preceding administrations and political parties.
Now, with TCJA, many of the original goals found within the Tax Reform Act are reappearing. Since President Trump’s first campaign speech in 2016, he has railed against the complexity of America’s tax system and the relative ease with which wealthy corporations and individuals utilize deductions and tax planning strategies to reduce their overall tax burden.
TCJA attempts to remedy this in large part by removing a host of existing deductions and exemptions, and going even further towards establishing a broader tax base for individuals and corporations, while reducing the “headline” tax rates for individuals and corporations.