After weeks of comparing different tax reform proposals and debating how to best meet various goals, the Congressional Conference Committee released their combined version of the two Tax Cuts and Jobs Act proposals that were passed by the House and Senate. This version of the bill more closely resembles the Senate version, and includes tax rate cuts for individuals, corporations and pass-through businesses, an elimination of many forms of tax deductions, larger exemptions from the estate tax and Alternative Minimum Tax (AMT), and numerous changes affecting multi-national businesses.
While steps were made to simplify our federal tax system, this proposal seemed to fall short of where previous versions landed. For example, rather than repealing the estate tax and AMT, this proposal simply expands the exemptions. Fewer taxpayers will be affected by them, but with AMT specifically, many will still have to go through the calculations to be sure. Several of the exemptions and deductions that were repealed in the original versions found their way back into this latest version. And most importantly, most of the changes affecting individual taxpayers are scheduled to expire after 2025. While the expectation is that many of those will eventually be permanently extended, it does set us up for another fiscal cliff-like showdown, similar to what occurred at the end of 2012.