Feb 7, 2019

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.

Go deeper

Inside Trump's antifa tweet

President Trump at Cape Canaveral on May 30. Photo: Paul Hennessy/SOPA Images/LightRocket via Getty Images

As recently as Saturday night, senior administration officials told me that the designation of a violent cohort of far-left activists, antifa, as a terrorist organization was not being seriously discussed at the White House. But that was Saturday.

Behind the scenes: The situation changed dramatically a few hours later, after prominent conservative allies of the president, such as his friend media commentator Dan Bongino, publicly urged a tough response against people associated with antifa (short for "anti-fascist").

U.S. enters 6th day of nationwide protests over George Floyd's killing

A protest in Philadelphia on May 31. Photo: Mark Makela/Getty Images

Protests continued across the country for the sixth day in a row on Sunday, as demonstrators called for justice in response to the deaths of George Floyd, EMT Breonna Taylor, jogger Ahmaud Arbery and countless other black Americans who have suffered at the hands of racism and police brutality.

What's happening: Protestors in D.C. broke one police barricade outside the White House on Sunday evening after reportedly demonstrating for several hours. The atmosphere was still largely peaceful as of 6pm ET.

Trump privately scolded, warned by allies

Illustration: Aïda Amer/Axios. Photo: Win McNamee/Getty Images

Over the past couple of days, numerous advisers both inside and outside the White House have urged the president to tone down his violent rhetoric, which many worry could escalate racial tensions and hurt him politically.

Behind the scenes: The biggest source of internal concern was Trump's escalatory tweet, "when the looting starts, the shooting starts." Some advisers said it could damage him severely with independent voters and suburban women.