Business tax reform and trends: survey views
Views on the prospects for federal tax reform
While respondents have tempered their outlook for progress on tax reform since our last survey, expectations remain positive.
The Tax Council (TTC)/Ernst & Young LLP Tax Reform Business Barometer (the Barometer) assesses business tax professionals’ views on the outlook for and key aspects of federal tax reform.1 The Barometer tracks the views of business tax professionals as the US Congress debates and considers reform of the US tax system.
In addition to questions on tax reform, the May 2017 Barometer also included questions on:
- The impact of the House Republican Blueprint for Tax Reform
- Expectations for when the Senate Finance Committee chairman will release a tax reform proposal
- Corporate and individual income tax integration
- Whether tax reform is expected to be comprehensive
Prospects for federal tax reform
- A majority of those responding (62%) believe tax reform is likely to be enacted in 2017 or 2018 — on average, 26% of respondents believe tax reform will likely be enacted in 2017, while 36% believe tax reform will likely be enacted in 2018.
- Half of respondents gave passage of tax reform legislation at least a 50% chance in the House and at least a 23% chance in the Senate.
- Approximately 75% of respondents think reform will be comprehensive, similar to the 73% of respondents from the January 2017 Barometer.
House Republican Blueprint for Tax Reform (the Blueprint)
- Expectations for when statutory language for the Blueprint will be released have tempered since the January 2017 Barometer, with 36% of May 2017 respondents believing statutory language will be released in September or October 2017 and 29% believing statutory language will be released in July or August 2017.
- 39% of respondents expect a higher corporate income tax rate if the border adjustment provision is not retained in the Blueprint. 27% of respondents expect base erosion-type provisions similar to those proposed in former House Ways and Means Committee Chairman Dave Camp’s 2014 tax reform plan as the most likely alternatives to replace the revenue that would have been generated by the border adjustment provision.
Tax reform proposal from the Senate Finance Committee
- May 2017 respondents generally believe the Senate Finance Committee will release a tax reform plan; only 21% believe the chairman will release no plan at all.
- Respondents are split on what a potential tax reform plan from the Senate Finance Committee might look like: 38% believe the plan will be similar to the 2014 Camp tax plan, while 29% believe the committee will release a plan integrating individual and corporate income taxes.
Modeling tax reform
- Many organizations are taking steps to model various tax plans — 80% of respondents are modeling the impacts of proposed plans on their organization’s federal tax liability, 58% are modeling the impacts on their organization’s competitive positions in their industry and 54% are modeling the potential impacts on their organization’s markets.
1 The TTC/EY Tax Reform Business Barometer defines tax reform as legislation that substantially broadens the tax base or changes the tax rate for either corporate or individual taxpayers.