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Tax Reform

US Tax Law Changes: How Far We've Come and Where We're Headed

by
Lee Reams II
on
8/26/2019
US Tax Law Changes: How Far We've Come and Where We're Headed

If it feels like the tax laws in the United States have been in a constant state of flux since the passage of the Tax Cuts and Jobs Act in 2017, you're not imagining things. But what may be even more interesting than the changes that have already happened are the ones that are currently being proposed and working their way through Congress.

Generally speaking, there are a few key upcoming tax law proposals that you should be aware of, each of which brings its own fair share of implications in terms of what changes it will create over both the short- and long-term. These include proposals such as:

  • The Secure Act — Short for “The Setting Every Community Up for Retirement Enhancement Act of 2019,” this legislation will increase the cap to 15% from the current 10% of employee pay that required automatic escalation of employee deferrals. It's intended to provide greater flexibility, improve protections for employees, and better facilitate plan adoption all at once.
  • Performing Arts Legislation — The goal here is to increase the adjusted gross income limitation for above-the-line deductions of expenses, particularly aimed at employees who fall under the “performing artist” umbrella.
  • The Gig Act — This particular bill will establish a hard and firm test that will be used to determine whether a service provider should be classified as an independent contractor or a traditional employee. As the tax implications of those statuses vary greatly (and as gig economy positions grow in popularity), it stands to reason that this is one piece of legislation that many business owners in particular are paying very close attention to.
  • The Extender Act — This bill aims to amend the Internal Revenue Code of 1986 in a way that will extend certain expiring provisions, particularly those relating to disaster tax relief, for another few years.
  • College Admissions Fairness Act — As the name implies, the purpose of this bill is to expand the current tax code's more-than-charitable quid pro quo rules to cover a situation where a student's family might make a very large donation to a university in order to make sure their child is guaranteed acceptance. It's safe to say that this was inspired in no small part by the recent college admissions scandal.
  • The Taxpayer First Act — This bill is actually designed to modify the requirements of the IRS itself in terms of not only its organizational structure but also customer service, enforcement procedures, the use of electronic systems and more.
  • Taxpayer Certainty and Disaster Tax Relief Act — Finally, this bill is attempting to extend certain tax provisions for both individuals and businesses, along with providing tax incentives for energy production and green jobs. Likewise, it wants to eliminate increases to the estate and gift tax unified credit after 2022, while also providing disaster tax relief for taxpayers across the board.

As you can see, many of these new tax law proposals are as far-reaching as they are varied. But what do real tax professionals have to say about them, and what additional tax law changes would they like to see moving forward?

That's the precise question that we asked a number of our own professionals, and their responses were fascinating to say the least.

If it were up to you, what changes would you make to current tax laws in the US?

Terrence O'Neill, EA of Terry O'Neill EA LLC said that he had a simple suggestion that would make a big impact: “Move Charitable Deductions OFF of Schedule A and onto Schedule 1 (Adjustments to Income) in order to become fully deductible.”

His reasoning for this was simple: “Since the increase in the Standard Deduction has caused much of Charitable Giving to become nondeductible, I believe the evidence of a decrease in giving will ring true and harm many non-profit 501(c)(3) organizations.”

Bradley Smith, EA of Bradley Smith, Inc. had a different suggestion, albeit just as powerful. He said that “the law should eliminate the provision disallowing deductible IRA contributions for non-covered spouses over the specified AGI. I would like to see middle class-friendly changes to allow for an increase in the tax-deductible amount of student loan interest, along with an increased deduction for teacher expenses.”

Mr. Smith also wanted to see “an increase in the amount of the dependent care expenses allowed for the dependent care credit.”

Tax law is nothing if not fluid; it can and should be in a constant state of evolution as society continues to change all around us. Something that is a top priority today might not hold the same status tomorrow, and we need to be able to make regular changes to our tax laws to reflect that.

It's clear that taxes are going to change in ways both large and small over the next few years, but whether Congress actually takes the advice of expert professionals like ours remains to be seen.

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Lee Reams II

Lee Reams II

CEO

I am a tax and business news junkie who has spent the last 20 years developing and executing "best in class" word-of-mouth marketing campaigns for tax and accounting professionals. With TaxBuzz and CountingWorks we have taken that same commitment to quality content directly to the consumer. Keeping you up-to-date with the latest tax law changes, business growth tips and planning strategies to help you reach your best financial outcome.

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