Feb 7, 2019

Axios PM

1 big thing: The Trump tax cut surprise

Illustration: Sarah Grillo/Axios

Don't look now, but added complexities from the 2017 Trump tax cuts are driving a hiring boom for tax lawyers and accountants, along with a rash of issues where they shouldn't expect help.

Driving the news: "U.S. accounting firms crossed the one-million-employee threshold last year ... Job growth in the sector in the first year of the law was 3.6%," the WSJ's Richard Rubin notes.

  • "Deloitte Tax LLP grew by 10% this fiscal year and expects another 10% bump next year. KPMG LLP says it hired twice as many experienced employees in 2018 in its U.S. tax practice as it did the year before."
  • “[The Trump tax cuts] created just a whole lot of new complexity and it’s given us mountains of new guidance to figure out and to deal with," McDermott Will & Emery LLP partner David Noren told The Journal.

Between the lines: It's not exactly a surprise that a rewrite of the tax code would create new business for accountants, Axios' David Nather notes.

  • But the piece is a reminder that any tax code rewrite is going to make some tax laws more complex, not simpler — and someone always benefits from that.

Why it matters: The tax cuts simplified filing for many Americans — particularly by doubling the standard exemption — but have added a slew of issues on the corporate side.

  • International: "Multinational companies are subject to two new minimum taxes and complex rules for calculating a one-time tax on their past foreign profits. And Congress didn’t eliminate many of the old rules, instead layering new ones atop them."
  • Domestic: "Pass-through businesses such as partnerships can get a special 20% deduction, but they have to follow detailed regulations ... Businesses of all types face new restrictions on net operating losses and interest deductions and have new potential benefits from accelerated depreciation."

The bottom line: Don't expect Democrats to rush to help on the "technical corrections" Republicans have introduced to fix elements of the bill, especially after Republicans spent years rejecting Democratic efforts to clean up the Affordable Care Act.

Bonus: Pic du jour
Photo: Chris Kleponis - Pool/Getty Images

President Trump speaks during the 2019 National Prayer Breakfast this morning in D.C.

2. What you missed
  1. Trump says he won't meet with China's Xi Jinping before the deadline for the 90-day trade war ceasefire. Go deeper.
  2. Rep. Alexandria Ocasio-Cortez says House Speaker Nancy Pelosi is "doing a great job." Go deeper.
  3. Apple released an iOS update today fixing the group FaceTime bug that allowed people to see and hear the people they were calling even before the recipient answered. Go deeper.
  4. Ford will invest $1 billion and add 500 jobs to two Chicago-area manufacturing facilities to expand production of the Ford Explorer and Lincoln Aviator, CNBC reports.
  5. Film director Woody Allen has filed a $68 million lawsuit against Amazon Studios alleging there was a breach of contract when the studio backed out of a four-picture deal and refused to air one of Allen's completed films, Variety reports.
3. 1 fun quote
“How do you have that french fry arrive 27 minutes later to taste the same way?”
— White Castle spokesman Jamie Richardson to the WSJ, on a central challenge of fast food delivery