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Tax Reform Bills: What are the Pros Saying?

Tax Reform Bills: What are the Pros Saying?

There's been a lot of commotion around tax reform lately and with the Senate version of the bill passing last week, there's much to discuss.

Today we hosted a live Twitter chat with some of the top industry leaders, tax experts and small business owners to get their thoughts on this controversial topic.

  • With the current tax reform proposals, who do you see as the biggest winners and losers?
  • How do you think the proposed tax reform changes would affect homeownership?
  • The House version caps the pass-through tax rate at 25% but w/ 70% as wage income taxed at ordinary income tax rates & 30% as business income subject to the 25% max tax. The Senate Bill provides a simpler 23% deduction limited to 50% of wage income. Which do you think will be more beneficial to small business?
  • If you were writing the tax reform law, what would you propose?
  • If the Democrats and Republicans had worked together what would have been different in the Tax Reform bill?

These are just a few of the questions the pros discussed and debated in today's very active live Twitter chat session.

Thank you to everyone who participated! Be sure to check out the highlights of the chat below.

To see the full chat session, click here.

@TaxBuzzOnline will be hosting a #TaxBuzzChat on Twitter the first Wednesday of every month at 10am PT/1pm ET. Our next chat will be Wednesday, January 3rd. Don't miss out on the next hot topic!

Let's get started! Q1. With the current #taxreform proposals, who do you see as the biggest winners and losers? #taxbuzzchat pic.twitter.com/sS4Twd2xqJ

A1. Corporations that have been subject to double taxation appear to be the clear winners, based upon the available information. #taxbuzzchat

A1. NY, California, and NJ are definitely not happy about the SALT deduction repeal. #taxbuzzchat

A1. Losers: 1. Individuals residing states and locals with income tax.  They will lose a huge deduction if the SALT deduction is no longer allowed. 2. Individuals who suffer casualty losses not located in a disaster area. #TaxBuzzChat

A1. losers: tax preparers that will have to deal with a whole new set of rules for federal and for many states as well #TaxBuzzChat

A1. winners are hard to pin down with so many changes. But it would appear the very low income large families will benefit substantially from the increased CTC #TaxBuzzChat

A1 on individual side, biggest winners are those folks who are in the top tax bracket. House keeps 39.6% top rate, but increases the earnings limit at which it kicks in. Senate cuts top rate to 38.5% #taxbuzzchat

A1. Agree C-corporations are big winners. Loser: individuals with lots of itemized deductions and children. #taxbuzzchat

I'm hearing that some things will be added back - like SALT provisions - to get the votes; so "reform" will be basically what we have now #taxbuzzchat https://t.co/thy1wu2oiT

-- Kay Bell (@taxtweet) December 6, 2017

Now that we've discussed the biggest winners and losers, lets talk about how these changes will affect homeowners.  

Q3. How do you think the proposed #taxreform changes would affect #homeownership? #taxbuzzchat pic.twitter.com/7s8jZFDDH6

A3. The House version would limit home mortgage interest to the interest on acquisition debt of $500,000 down from the current $1,000,000 for purchases after November 2, 2017.  #TaxBuzzChat

A3 (cont) In certain areas of the U.S., such as CA, HI, NJ or NY you would be hard pressed to find a reasonable home for $500,000, so it could affect the markets in those areas.  #taxbuzzchat

A3. The House version does not allow an interest deduction for second homes.  If passed into law, that would make second home ownership less attractive since the interest and property tax deductions help offset the cost of ownership.  #TaxBuzzChat

A3. If passed it will negatively affect homeownership because there will be less incentive to own a home because of the elimination of property tax, less people will itemize deductions #TaxBuzzChat

a3. Both the House and Senate want to increase the live-in time period to 5 out of the last 8 years. The Senate bill allows for some exceptions to the time requirement, like if a seller is leaving due to a change in jobs or health care #taxbuzzchat

a3. The Senate's tax plan would eliminate deductions for state and local taxes -- including property taxes. The House plan, on the other hand, would preserve property tax deductions, but cap them at $10,000 #taxbuzzchat

-- Sharon Morgan (@855TaxGirl) December 6, 2017

House version vs. Senate version. Which is more beneficial to small businesses? 

Q6. House caps the pass-through tax rate @ 25% but w/ 70% as wage income taxed @ ordinary income tax rates & 30% as biz income subject to the 25% max tax. Senate provides a 23% deduction limited to 50% of wage income. Which will be more beneficial to small business? #TaxBuzzChat pic.twitter.com/8mUgRVDNlx

A6  I like the Senate version for simplicity's sake as much as the deduction amount, especially for smaller pass-thrus. #taxbuzzchat

A6. Seems like it would depend on the facts of each client's business. These provisions are extremely complicated! It makes winners and losers - which usually does not make good tax law. #TaxBuzzChat

I believe the house bill will be more beneficial to small businesses that usually don't have total higher wages and would allow pass-thru income at lower rates #TaxBuzzChat

A6 - I think there are so many nuances and variations among businesses that it all depends on the facts & circumstances to each #smallbiz. #TaxBuzzChat @taxbuzzonline

A6. The #Senate version will be more beneficial because it provides a deduction that applies to all businesses regardless of tax bracket, while the House version provides for a 25% maximum tax and most small businesses never reach the level anyway #TaxBuzzChat

-- Lee Reams, BSME, EA (@LeereamsSr) December 6, 2017

Great question for everyone. What would you propose? 

Here's a shorter question for you! Q7. If YOU were writing the #taxreform law, what would you propose? #TaxBuzzChat pic.twitter.com/nrSDxGZkXP

a7. Good question. I would develop a plan that requires a balanced budget including reducing the current deficit; which will create wealth for the economy #taxbuzzchat

A7. I will keep individual and corporate rates at the same level, close loopholes so that corporation pay taxes, and close carried interest loophole #taxbuzzchat#taxbill #taxreform

All of our business and individual clients are going to need a lot of advice over the next year (already have talked to about 20 of my clients)! #TaxBuzzChat

A7 Impossible to answer in 280 characters. ;)

But for one, I think if we're going to make some fundamental differences in how we treat deductions, etc., that taxpayers have become used to, those should be phased in over time.#TaxBuzzChat

I like the concept of fewer brackets, but not too few. I am a firm believer in tax rate progressivity for individual filers  #taxbuzzchat

A7 regulation of taxpreparers. Taxpayers are abused by unregulated and or untested people that just hang a sign and take their money. #EnrolledAgents, and CPAs are the standard that should be accepted by taxpayers.  #taxbuzzchat

I agree, but I am having a hard time understanding their thinking in regards to some of the deductions. For instance axing casualty loss deductions except in disaster areas. #taxbuzzchat https://t.co/egsJwdDKha

-- Lee Reams, BSME, EA (@LeereamsSr) December 6, 2017

What tax reform issue will have the most impact on your client base?

A8. The loss of most itemized deductions and personal exemptions, increased standard #deductions and the enhanced child tax credit. #TaxBuzzChat https://t.co/KPLyLRRKDh

A8. Since I work on @bloombergtax's state tax team, I definitely think that the SALT deduction repeal and decoupling from IRC conformity will be major concerns. #taxbuzzchat

A8 - At our law firm, it will be the switch to a territorial system (we rep a number of international clients) and the treatment of pass-through entities. #TaxBuzzChat

A8: pass-through taxation (speaking, too, as one who'll personally be affected by this provision!) #taxbuzzchat

— Kay Bell (@taxtweet) December 6, 2017

If both parties worked together, what do you think would happen? What changes would there be? 

Last question before we wrap up! Q9. If the #Democrats and #Republicans had worked together what would have been different in the #TaxReform bill? #taxbill #TaxBuzzChat pic.twitter.com/NhWO06dtfR

a9. #Taxreform is more than cutting taxes. Both sides of the isle need to come together to solve budget/deficit shortfalls first, then a tax plan to maintain funding and improve the balance sheet of the US #government #taxbuzzchat

A9. I believe the #Democrats would have pushed for higher taxes on the wealthy and the #SALT deduction would have been retained. #taxbuzzchat https://t.co/ymOW7dhHqC

A9.   #TaxRates for pass-through entities would not be as low if #Democrats had worked on the bill with #Republicans .  The C Corporation tax rate would not be as low either.  #TaxReform  #TaxBuzzChat

A9 Student loan interest deduction still on front page, increases to education credits. Also alimony deduction, often looked at as women issue, will effect future alimony treatment.  #taxbuzzchat

-- Kerry Freeman EA (@kerryfreemanea) December 6, 2017

We had a great time chatting with our participants on such a hot topic. Feel free to use our #TaxBuzzChat hashtag or tweet us at @taxbuzzonline if you have any additional questions you'd like answered. You can view all the questions and full conversations here.

We'll be hosting #TaxBuzzChat the first Wednesday of every month at 10am PT/12pm ET for our monthly discussion on all things tax and accounting.  

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TaxBuzz Staff

TaxBuzz Staff

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