CCH Tax Day Report
President Trump, while maintaining a focus on tax reform, has signed one executive order and three presidential memorandums since being sworn into office on January 20 (TAXDAY, 2017/01/23, C.1). Trump’s executive order pertains to the Patient Protection Affordable Care Act (ACA) (P.L. 111-148), and one presidential memorandum implements a hiring freeze in the executive branch of the federal government. Additionally, the Trump administration has issued a regulatory freeze on certain new and pending regulations.
Trump predicted large tax cuts for businesses and individuals under his administration at a meeting with business leaders in Washington, D.C. on January 23. The president did not describe the extent of the tax rate cuts for individuals but said that the corporate tax rate would be between 15 and 20 percent.
“We are going to be cutting taxes massively for both the middle class and for companies. And that’s massively. We’re trying to get it down anywhere from 15 to 20 percent,” Trump said. During the campaign, he proposed cutting all business tax rates down to 15 percent, while the House GOP “Better Way” Tax Reform Blueprint suggests 20 percent for corporate taxes (TAXDAY, 2016/06/24, C. 1).
Trump is “going to sit down and work with Congress to get the best deal possible…he is going to work with Congress on that rate,” White House Press Secretary Sean Spicer told reporters in a press briefing later that afternoon. Calling Trump a great businessman and negotiator, Spicer said that Trump will get the best deal on behalf of the American worker and the American businesses that are hiring them.
Trump also briefly discussed his border tax proposal during Monday’s meeting. “So a company that wants to fire all of its people in the United States and build some factory someplace else and then thinks that that product is going just flow across the border into the United States, that’s not going happen. They’re going have a tax to pay, a border tax, a substantial border tax,” Trump said.
The president signed a presidential memorandum on January 23 implementing a hiring freeze in the executive branch of the federal government, which will include the IRS. The military is exempted from the freeze. The hiring freeze “is about, how do we respect the American taxpayer dollar more going forward,” Spicer said in the same press briefing.
Spicer emphasized the hiring freeze was implemented to avoid wasteful government spending of American taxpayer dollars. In times past, other presidents have also issued similar freezes in the federal government.
On January 20, Trump, by executive order, directed all federal agencies to “waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Affordable Care Act that would impose a fiscal burden on any state or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.” Federal agencies are directed to take this action within the ” maximum extent permitted by law.”
The president’s executive order did not describe which actions federal agencies should take. House Speaker Nancy Pelosi, D-Calif., said that the executive order appeared to address, among other things, the ACA’s individual shared responsibility requirement. The ACA generally requires individuals to carry minimum essential health coverage or make a shared responsibility payment, unless exempt. The ACA also requires applicable large employers to make a shared responsibility payment if not offering minimal essential coverage.
The executive order is intended to “minimize the economic burden” of the ACA, as stated in the order’s title. Congress has already taken a first step toward repealing the healthcare law (TAXDAY, 2017/01/16, C.2). Several years ago, President Obama took executive action to delay the employer shared responsibility requirement under the ACA.
The Trump administration on January 20 instructed federal agencies to stop all pending regulations until a legal and policy review can be conducted. “With respect to regulations that have been sent to the Office of the Federal Register (OFR) but not yet published in the Federal Register, immediately withdraw them from the OFR for review and approval…,” the memorandum says. The Obama administration, and the administration of President George W. Bush, issued similar directives.
The memorandum, issued by White House Chief of Staff Reince Priebus also addressed regulations that have already been published in the Federal Register but have not yet taken effect, calling for their effective date to be temporarily postponed for 60 days from January 20. The memorandum, as instructed to be published in the Federal Register, also specifies that the term “regulation” applies to any “regulatory action” including all “guidance documents.”
Comment. Among the regulations that appear to be impacted by the regulatory freeze are:
NPRM REG-136118-15 (Proposed Centralized Partnership Audit Regulations Issued), not yet published in the Federal Register (TAXDAY, 2017/01/19, I.7);
T.D. 9815 and NPRM REG-135122-16 (Final and Temporary Regulations on Payments Contingent on U.S. Source Dividends), publication date January 24, 2017, in the Federal Register (TAXDAY, 2017/01/20, I.9); and
T.D. 9817 (Final Regulations on Qualifying Income for Publicly-Traded Partnerships), publication date January 24, 2017, in the Federal Register (TAXDAY, 2017/01/19, I.10).
By Jessica Jeane and George L. Yaksick, Jr., Wolters Kluwer News Staff