Tax reform may be higher on the Capitol Hill agenda, but the likelihood that businesses or individuals will see any change this year is slim.
Chris Hennessey talks about issues he is monitoring on Capitol Hill, including tax reform and a Supreme Court case involving the future of health-insurance subsidies.
Although some members are advocating reducing the corporate tax rate, it’s unlikely that a measure would pass this year. Any change probably wouldn’t be approved until after the presidential election in 2016. In addition, progress on individual tax reform is unlikely in the near term. Complicating this discussion are many tax deductions, involving mortgage interest and charitable giving, that people do not want taken away.
Congress may, however, act on so-called “tax extenders,” but not likely until later in the year. Tax extenders are a package of 50 or so tax provisions that expire every year. A popular provision with investors is the charitable IRA rollover, which allows a person who is 70-1/2 years-old to direct a required minimum distribution of up to $100,000 from an IRA to a charity tax-free.
Other pending action in Washington, expected at the end of June, involves a Supreme Court case that is challenging the future of federal health-insurance subsidies, created by the Affordable Care Act. The court may rule to eliminate these subsidies for about eight million insured who live in states that only use the federal exchange. If this occurs, there are several legislative solutions being drafted to save the subsidies. There are also proposals that may eliminate the individual mandate or the 2.3% tax on medical devices.