United States

The End of the Tax Reform Road

Dec 26, 2017
From the Tax Governance Institute

The (Tax Reform) Law of Unintended Consequences

By John Gimigliano, Principal in Charge, Federal Legislative & Regulatory Services, Washington National Tax, KPMG LLP

Read more Tracking Tax Reform blog posts

What's on our minds this week:

At 10:30 a.m. on December 22, 2017, when President Trump signed the tax reform bill, H.R. 1, we came to the end of the winding road to enactment of tax reform. Now a new, perhaps more linear but nevertheless long, road lies before us toward implementation of the new law.

Although H.R. 1 is not a perfect bill, it mostly did what it set out to do: lower the corporate rate substantially and reconfigure the calculus of tax motivations for U.S.-based multinationals.

And most important, H.R. 1 has changed U.S. tax law in a major way. As easily the largest tax bill ever enacted, with nearly $6 trillion in tax cuts and more than $4 trillion in tax increases, it has potential to turn much of the tax world upside down.

The massive scale of the bill also means a massive scale of uncertainty in the years to come. The need for technical corrections, Treasury guidance, and new regulations in the coming years is almost too hard to imagine.

For many of us in the tax world, this era of understanding, interpreting, clarifying, and making business decisions based on the law could easily take us to the end of our careers.

That thought, though daunting, does have a silver lining. While not exactly predictable, the process of getting guidance from Treasury is almost always more predictable than the legislative process. Choices that are made tend to be less driven by politics and personalities and more by technical and administrability concerns. And those motivations tend to be more transparent than the often opaque process of writing, negotiating, and enacting tax law. So while the road may be long, we have reason to hope that it will be straight and level.

____________________

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG LLP.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.

____________________

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG LLP.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.