Ernst & Young LLP comments on US Senate tax reform summary

News provided by

Nov 09, 2017, 19:45 ET

WASHINGTON, Nov. 9, 2017 /PRNewswire/ -- Ernst & Young LLP Tax leaders commented on today's release of the US Senate's tax reform summary.

Michael Mundaca, Ernst & Young LLP's National Tax Department Co-Director and former Assistant Secretary for Tax Policy at the US Treasury Department, said:

"We are still at the beginning of the process, and there is a lot left to be done. Companies have only begun to analyze the impact of the proposals, and many are focused on evaluating the new international provisions. Companies need to model the effects of the overall package of proposals and see where they balance out. We need tax reform to make the US tax system more competitive, and CEOs have to look at the big picture in assessing the effects of the proposals on their companies."

Cathy Koch, EY Americas Tax Policy Leader and former Chief Policy Advisor to the Senate Majority Leader for Tax and Economics as well as former Tax Chief on the Finance Committee, said:

"It's crunch time. The drafting of the House and Senate plans has been a monumental undertaking and will impact taxpayers in every industry. As we look to action in the Senate, we have to remember that Senate Republicans have a very thin margin to work with, and they have to satisfy diverse constituencies, so the bill has to have broad appeal.

The Senate had the advantage of moving after the House, and differences in the Senate draft may reflect taxpayer reaction to the House bill. Key provisions in the corporate and foreign tax titles are different. And some of the provisions benefitting individual taxpayers—like the medical expense deduction, dependent care credit and current mortgage interest deduction—which were removed or limited in the House Ways and Means bill— are retained in the Senate Finance summary. All of these help with support for the bill but make the arithmetic more challenging.

They could be the reason for one of the most significant differences in the Senate bill – the delay in the corporate rate reduction.

It will be very interesting to see how the full House reacts to the Ways and Means product on the floor, given the differences in the Senate Finance proposal."

Ray Beeman, co-leader of the Washington Council Ernst & Young practice and former Tax Counsel and Special Advisor for Tax Reform with the US House Committee on Ways and Means and former Legislative Council for Congress' Joint Committee on Taxation, said:

"The approval of the Republican tax bill by the House Ways and Means Committee and the release of the Senate Finance Committee plan are both pivotal moments in the tax reform process. While various aspects of the plans are similar, the Senate tax reform proposal differs from the House in significant ways that are possibly affected by limitations imposed by the budget process. There are still several key issues to work through like lower business income tax rates, international tax changes and base broadening, but we expect it to be a fluid process with an aggressive year-end deadline and an even tighter margin for Republicans in the Senate than in the House."

About EY

EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

This news release has been issued by Ernst & Young LLP, a member firm of EY serving clients in the US.

SOURCE EY