Business tax reform and trends: survey views
Views on the prospects for, and key aspects of, federal tax reform
Respondents show a continued shift toward a belief that tax reform will be comprehensive, versus a targeted tax reform plan.
The Tax Council (TTC)/Ernst & Young LLP (EY) Tax Reform Business Barometer (Barometer) assesses business tax professionals’ views on the outlook for, and key aspects of, federal tax reform. 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 September 2017 Barometer also included specific questions on the possibility of a unified Republican tax reform plan, bipartisan tax reform and a possible Democratic tax reform plan. It is worth noting that the Barometer survey results were completed before the September 27 release of the “Unified Framework for Fixing Our Broken Tax Code.”
Prospects for federal tax reform
- A majority of those surveyed (62%) believe that tax reform is most likely to be enacted in 2017 or 2018. On average, respondents believe that there is a 24% likelihood that tax reform will be enacted in 2017 and a 38% likelihood that tax reform will be enacted in 2018. These views are similar to those of the May 2017 Barometer respondents who, on average, believed that there was a 26% and 36% chance of enactment in 2017 and 2018, respectively.
- Half of respondents gave passage of tax reform legislation at least a 40% chance in the House and at least a 20% chance in the Senate.
- Approximately 83% of respondents believe that tax reform will be comprehensive, a somewhat greater percentage than the 73% of respondents from the January 2017 Barometer.
- Most respondents believe that tax reform, if enacted, will reduce revenue (75%) or be revenue neutral (24%). Very few respondents (2%) believe that a tax reform bill, if enacted, would raise revenue.
- Thirty percent of respondents believe that tax reform will be enacted on a bipartisan basis, with both Democratic and Republican support.
Prospects for tax reform from Republicans
- A large share (79%) of respondents expect Republicans to release a tax plan that reflects a unified tax reform approach by House and Senate Republicans and the Trump Administration.
- Of respondents who think Republicans will release a unified tax reform plan, 91% expect the plan to be released before the end of 2017, with 59% believing that the plan will be released in September or October 2017 and 33% believing that the plan will be released between November and December 2017. The remainder of respondents (9%) believe that the plan will be released in the first half of 2018.
- Seventy-six percent of respondents who believe Republicans will release a unified tax reform plan expect a top statutory corporate income tax rate between 20% and 24%.
- Respondents indicated that a minimum tax on foreign-source income and a limitation on the home mortgage interest deduction are the provisions most likely to be included in a unified Republican tax reform plan: 100% and 91%, respectively, of respondents believe these provisions will be included.
Prospects for tax reform from Democrats
- Seventeen Percent of respondents believe that Democrats will release a tax reform plan.
Expectations for the comprehensiveness of tax reform
- The September 2017 Barometer again asked whether tax reform would be comprehensive or more targeted (e.g., international, corporate, business only). The results reflect a continued shift toward a belief that tax reform will be comprehensive, with 83% of respondents indicating that they believe reform will be comprehensive. Only 45% of respondents believed that tax reform would be comprehensive in the January 2016 Barometer, as shown in the table below.
- In September 2017, only 6% of respondents expected business-only reform (i.e., C corporations and pass-through businesses), and only 5% expected corporate-only reform. Only 3% expected international-only tax reform, and 3% indicated that they expected individual-only reform.