Originally published on Forbes.com.
This might serve as a cautionary tale for those of you tempted to take up tax blogging . Congress and the President are promising us a major tax act. President Trump would like it to be called the Cut Cut Cut Act. You know, if you ever wonder about President Trump, you really should read Art of The Deal. He explains it all there:
The final key to the way I promote is bravado. I play to people’s fantasies. People may not always think big themselves, but they can still get very excited by those who do. That’s why a little hyperbole never hurts. People want to believe that something is the biggest and the greatest and the most spectacular. I call it truthful hyperbole. It’s an innocent form of exaggeration – and a very effective form of promotion.
The bill will, it seems, not just have cuts. There will also be revenue raisers. Nonetheless, I think the President is right that the Cut Cut Cut Act will be a much more accurate name than the Tax Reform Act of 2017. The promised ingredients could be characterized as reform in some regards. Possibly a lot fewer people will need to itemize.
The special rate for flow-through entities, on the other hand, promises to introduce immense complexity. The special rate for flow-through entities is the stupidest ideas I have ever heard of and, as a tax professional, I just love it. Also, the lower corporate rate opens the possibility of a renaissance for C corporations which were largely banished from my part of the world thirty years ago.
The Tax Reform Act of 1986 taught me the lesson that is really a bad idea for tax professionals to pay too much attention to proposed legislation I studied the proposals intensely and in the years following would sometimes have things pop into my head that seemed relevant, but did not actually pass. So if I had just sensibly remained the kind of backroom tax guy that really successful CPAs like to have in their back pocket, I would be relaxing for the next month or so until President Trump actually signs something.
Then I would burn the midnight oil studying the bill and figuring out the opportunities and pitfalls it created for our client base. I would feel really great as it would be another time that the bookish and introverted get to shine. My deficiencies – carelessness about appearance, inability to play golf, abysmal knowledge of sports, driving a cheap car – would be ignored as I would know more about the new tax bill than just about anybody in the firm.
But, no. I had to go back to my youthful ambition and become a writer of sorts. So I have been obsessively watching for little tidbits and at 8:00 AM on November 2, 2017, am already on my third cup of coffee, because a draft bill is promised to drop at 9:00 AM.
Just as I never really adopted all the traits of a successful CPA, I have also not adopted what it really takes to succeed in the blogosphere. I’m not going to be able to post anything two minutes after the proposed bill is released. Maybe sometime tonight. The pieces that most intrigue are the special rate for flow-through entities (or whatever you want to call it) and the immediate effect that a signature on the bill would have on corporate earnings. The latter is something that almost nobody seems to be thinking about.
If the bill does fall from the sky at 9:00 AM, you know what I will be doing all day. I hope to have something for you tonight.
Update
Here is a link to H.R. 1 – Tax Cuts and Jobs Act.