Today important announcements will be coming about President Trump’s budget plan, the potential repeal of the Estate Tax in the president’s tax reform proposal, and large chunks of the Dodd-Frank Act being removed in the proposed Financial Choice Act.
Schoening, NAED, and tED magazine will be staying on top of these key issues to make sure you are aware of the legislation that most impacts your business. We will also be attending the NAED Congressional Fly-In on June 20-21. Sign up to attend if you have issues you want your lawmakers to hear.
OMB Director Mulvaney will brief the press on President Trump’s FY18 Budget at 11 a.m. EDT. Watch it live here. A week ago, in a Bloomberg TV interview, Senate Majority Leader Mitch McConnell (R-KY) said, “Well, we generally, no matter who the president is, generally don’t pay too much attention to the president’s budget.” Expect:
- 3% real economic growth
- Defense increase in FY18 of $54 b.
- 70 F-35 Joint Strike Fighters (down 4 from FY17)
- 14 F-18s
- 8 Navy ships
- 56,000 more troops
- Infrastructure spending of $200 b. to support $1 tr. of public-private projects
- Strategic Petroleum Reserve sale of half of its crude
- ANWR drilling
- End Gulf oil & gas revenue sharing
- Bonneville Power sale
- Medicaid cut $600 b. FY18-FY27
- IRS cut $500 m. in FY18
- Slash $1.7 tr. from non-defense discretionary spending FY18-FY27
- Parental leave for both parents, $25 b. FY18-FY27
No more details of Trump tax proposal. Normally, when a president offers his budget it includes detailed descriptions of his tax and spending proposals, but President Trump’s FY18 budget won’t add any additional detail. The Treasury Department usually provides a “Green Book,” a very detailed and voluminous description of tax proposals but the President will stick to broad strokes for two main reasons. 1) Though the pillars are set, the President’s team is still in a listening mode on the details of tax reform. They do not want to create an unnecessary political firestorm by getting something wrong. 2) The administration wants to maintain the strongest position possible on tax reform – their call for slashing business rates to 15% is an opening bargain and a signal to Congress that tax reform should be bold.
The budget is a political document that is rarely enacted, but provisions are often taken in smaller pieces by Congress. One big win for many small businesses: technical estate tax and gift tax increases will be taken off the table for the first time in eight years. The previous administration’s green book always recommended technical changes (pg 203) that would force small businesses to pay more death taxes, including the section 2704 valuation regulations that were nearly pushed into law by the Treasury Department before the election. Those proposed regulations now face a certain death as the administration pushes for repeal of the estate tax.
Border Adjustment Tax Pros and Cons at 10 a.m. This morning’s House Ways and Means Committee hearing (witnesses) (live stream) will feature competing views of retailers versus exporters and academics. Without the $1.2 trillion the border adjustment tax would raise over the next decade, it would be impossible to get the top corporate marginal tax rate down to the 20% proposed in the House Republican Blueprint. See this 51-page Joint Committee on Taxation background pamphlet. A week ago, in a Bloomberg TV interview, Senate Majority Leader Mitch McConnell (R-KY) said of the BAT, “it probably wouldn’t pass the Senate.” Last night, House Ways and Means Chair Kevin Brady (R-TX) met with Vice President Pence to discuss health care and tax reform. He described the meeting as “just good discussions about delivering on both this year,” but he declined to provide any specifics.
CHOICE Act: House Financial Services Chair to speak at 11 a.m. Rep. Jeb Hensarling (R-TX) will speak for about half an hour from the American Enterprise Institute in D.C., live here. The measure, H.R.10, has a good chance of passing the House this year but like many pieces of legislation faces an uphill battle in the Senate.
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