Implications of the 2017 Tax Cuts and Jobs Act expiring

The Tri-City Regional Chamber of Commerce has recently signed onto a Tax Coalition Letter with the US Chamber of Commerce. The letter addresses the potential expiration of tax benefits as outlined in the 2017 Tax Cuts and Jobs Act. The expiration of the Tax Cuts and Jobs Act (TCJA) would have significant ramifications to businesses. Here is a deeper look into the potential on impacts on business:

1. Tax Treatment of Business Expenses and Investment Costs:
   • Current Situation: Businesses can currently deduct certain expenses and investment costs, which lowers their taxable income.
   • Post-Expiration: Without these deductions, businesses may face higher taxable income, leading to increased tax liabilities. This could discourage investment and expansion, potentially slowing economic growth.
2. Twenty percent Deduction for Pass-Through Business Income:
   • Current Situation: Qualifying pass-through businesses (like sole proprietorships, partnerships, and S-corporations) can deduct 20% of their income.
   • Post-Expiration: Eliminating this deduction would increase the effective tax rate on these businesses, reducing their net income and possibly leading to higher prices for consumers or lower wages for employees.
3. Competitive International Tax Code:
   • Current Situation: The TCJA introduced measures to make the U.S. tax code more competitive internationally, such as the Global Intangible Low-Taxed Income (GILTI) provision.
   • Post-Expiration: Reverting to pre-TCJA rules could make U.S. businesses less competitive globally, potentially leading to a shift of operations and profits to countries with more favorable tax regimes.

Broader Economic Implications
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1. Economic Growth: The TCJA was designed to stimulate economic growth through tax cuts and incentives. Repealing it could slow growth by increasing the tax burden on businesses and individuals.
2. Federal Revenue: Repealing the TCJA could increase federal revenue in the short term, but the long-term impact on economic growth and tax revenue is uncertain.
3. Political Landscape: With a significant portion of Congress not having been in office when the TCJA was enacted, there may be differing views on its effectiveness and the best path forward for tax policy.

Repeal of the TCJA could impact individual businesses as well as the economy. Stayed tuned for more information.