5 Truths about Tax Reform – for the Time Being

  • September 20, 2017

Autumn has arrived, and we still don’t know much about the specifics of U.S. tax reform. So what can we say about it? Not much, at least not definitively, but there are five general statements we can make about tax reform and how it might affect companies:

  1. Tax reform takes a long time. Reform requires a carefully coordinated effort among the House, Senate and President. In fact, tax policy historians state from experience if the President is not a champion for tax reform, it is unlikely to occur. President Trump has sent a clear message that he supports tax reform, and Congress also seems committed. From this perspective, odds look good that some type of tax reform will happen, but it remains to be seen how soon. President Trump appears to be pushing hard to get Congress to get it done quickly.
  2. Yogi Berra remains relevant. As Yogi Berra once said, “It ain’t over until ‘til it’s over.” At this point, tax reform hasn’t even really started yet. Yes, the President has laid out his high-level agenda and has indicated his support. And yes, there was a House “blueprint,” to get the talk going, but since the blueprint is not a bill, the clock hasn’t started.
  3. There will be winners and losers. Tax reform has the potential to set up conflicts by industry, business type and/or size and could even pit businesses against individuals. In addition, there could be different outcomes for U.S.-based companies depending on where their parent companies are located.
  4. History probably will not repeat itself. Past tax reform achievements are no indication of future success. What has worked in the past may not work today based on current economics, global politics and tax policy, public perception and other key factors.
  5. The devil is in the details. While there seems to be consensus on the need for tax reform, and at least some agreement on a set of overarching principles (like a lower corporate tax rate), so far no one has been able to agree on the specific changes needed to achieve these and other outcomes. There isn’t even agreement yet on what the new, lower corporate tax rate will be, although we have been promised some more details before month’s end.

There are many proponents of achieving tax reform this year, but given the time we have left, the likelihood that everyone can agree on how to get there seems optimistic at best. This uncertainty is affecting corporate tax departments and their ability to plan and advise their businesses. While tax professionals remain hopeful that tax reform will occur this year, they remain in a wait-and-see mode, at least for now.

Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.


About this Contributor

Bernadette Pinamont Headshot
Bernadette Pinamont
Vice President, Tax Research

Bernadette Pinamont is Vice President of Tax Research responsible for leading a global team of 85 tax professionals who contribute subject matter and technical expertise to build and maintain content for all products, powering millions of effective tax rate determinations for customers in over 19,000 global jurisdictions.

Prior to joining Vertex, Bernadette was Vice President of Tax for Endo Pharmaceuticals. Bernadette's 30 plus year tax career also includes the corporate tax departments of AstraZeneca, DuPont, Syngenta, Tyco Toys, and, initially, EY. When Bernadette joined Vertex in 2013, she was a thought leader in the Chief Tax Office and engaged both industry and clients on the trends, patterns, and emerging solutions to address the global challenges associated with regulatory compliance and tax technology.

Bernadette regularly speaks at local and industry events about tax and the importance of technology, including the annual International Tax Review’s (ITR) Women in Tax Forum. She leads the Philadelphia Women’s Tax Network and is a graduate of Seton Hall University, from which she earned both a B.S. in Accounting, Summa Cum Laude, and her Juris Doctor. Bernadette is also a licensed attorney and a CPA.

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