President Trump: What does he mean for CPAs?
Buckle up, CPAs: Your regulatory ride is about to kick into high gear.
Donald Trump’s unprecedented ascension to the presidency and Republicans’ control of Congress have laid the groundwork for a series of reforms that could add a few more layers of complexity on a CPA profession that’s already struggling to keep its head above the regulatory waves.
Mark Peterson, executive vice president of advocacy for the American Institute of CPAs, offered a snapshot of the many ways in which a Trump administration will impact CPAs’ work during a riveting presentation at the MACPA’s 2016 CPA Summit in December.
Trump’s impact on the profession might be felt almost immediately, and tax reform might be an early target. Peterson said Trump’s tax reform proposal is a “kissing cousin” to the GOP’s tax blueprint.
- Each calls for three individual income tax brackets of 12 percent, 25 percent, and 33 percent.
- Each calls for the elimination of both the corporate and individual alternative minimum tax, or AMT.
- Trump is calling for a corporate tax rate of 15 percent. The GOP blueprint calls for a corporate rate of 20 percent.
When you add the fact that Republicans control the presidency and both houses of Congress, the stage is set for significant tax reform … and sooner rather than later.
It’s probably long overdue. According to Peterson, our tax law in 1986 spanned 26,000 pages. Thirty years later, it has swelled to more than 74,000 pages.
“Everyone is dying for some certainty and specifics around tax reform. We don't have that yet,” Peterson said. Still, he added, “tax reform is very likely to happen, and quickly.”
But Trump might be ready to target a lot more than tax reform.
- Dodd-Frank: The financial reforms enacted during the early years of the Obama administration came under almost constant fire from Republicans. But with Obama promising a veto, Congress decided it wasn’t worth the effort to put forth legislation that would roll back Dodd-Frank. That presidential roadblock no longer exists, so Peterson says we can expect some action on the Dodd-Frank financial reforms early on in Trump’s presidency. That likelihood increases significantly when we factor in the House of Representatives’ passage this year of the “Financial Choice Act,” which would roll back significant provisions of Dodd-Frank. The proposal passed the House with changes advocated by the profession that centered on PCAOB disciplinary proceedings, congressional requests for information, Sarbanes-Oxley Section 404 exemptions, and funding for the Governmental Accounting Standards Board.
- Health care: Trump won the election thanks in part to his promise to get rid off — or at the very least significantly roll back — President Obama’s signature Affordable Care Act. Doing so will probably be an extremely tall order, Peterson said, but the GOP’s demand for Obamacare reform is so high that it’s logical to expect some movement in this area early on in the Trump administration. Exactly how much of the ACA Trump decides to change is up for debate. Since the election, he has indicated a willingness to keep some of the more popular provisions of Obamacare in place.
- Budget reconciliation: Interestingly, one of the avenues through which the Affordable Care Act could be repealed is budget reconciliation, a complex process through which legislation is enacted that would change existing laws in an effort to bring spending and revenues in line with current budget resolutions. According to Peterson, that same process was used to help enact the ACA in 2010.
- DOL overtime rule: Trump has suggested he might put forth executive actions on business-related issues like the Department of Labor’s proposed overtime rule, which would more than double the salary at which workers would qualify for overtime pay. A federal judge in Texas issued a temporary injunction in late November that stopped the implementation of the rule, which was to have taken effect on Dec. 1.
- DOL fiduciary rule: Peterson said Trump also appears poised to issue an executive order related to the DOL’s new fiduciary rule, which puts forth a number of provisions to make sure that financial advisors who provide retirement advice act in their clients’ best interest. Indications are that there is significant opposition to the rule within Trump’s transition team.
- The Supreme Court: The nine-member judicial branch is down to eight following the February 2016 death of Justice Antonin Scalia. President Obama nominated Merrick Garland, chief judge of the U.S. Court of Appeals for the District of Columbia Circuit, to fill the void, but Republicans in the Senate successfully blocked that nomination, saying the next president should make that nomination. Now, Trump appears poised to nominate not only Scalia’s successor, but potentially two other justices as well. Liberal justices Ruth Bader Ginsburg (age 83) and Stephen Breyer (78) could conceivably retire within the next four years, which would give Trump an opportunity to build a Supreme Court with a 6-3 conservative edge, something that hasn’t happened since the 1930s.
Join us at CPA Day Trump’s election isn’t the only source of legislative and regulatory uncertainty.
Maryland’s General Assembly reconvenes next month in Annapolis, and a number of Maryland-centric issues will likely surface that will add to the already significant complexity that CPAs are feeling.
That’s why it’s more important than ever that you join the MACPA at the 2017 edition of CPA Day in Annapolis.
Scheduled for Jan. 26, the event will give CPAs an opportunity to discuss issues of importance to the profession directly with their legislators — but not before MACPA Executive Director Tom Hood coaches CPAs in the finer points of speaking with lawmakers.
Following the legislative meetings, CPAs will receive two free hours of CPE and enjoy lunch with their legislators and their aides.
The more CPAs who join us in Annapolis, the louder our collective voice becomes, and the stronger the profession becomes in the process.
For complete details and to register, visit MACPA.org/cpaday.