January 12, 2017
As the Trump transition advances and Congressional leaders are at work both planning and drafting key legislative initiatives for the upcoming 115th session, the emerging agenda and critical developments in the area of tax policy are coming into greater focus. The coming changes will have major implications on business, as well as on the need, opportunity and window to engage the incoming Trump Administration and Congressional leadership on this important issue.
The centerpiece of the Trump agenda is a planned re-write of the U.S. Tax Code that is set to be a priority for the first “100 days” of the new Administration. Over the past few weeks, we have been engaged with the Trump Transition Team and leading Members of Congress and staff involved in developing new tax policy and legislation.
Based on discussions with the Trump Transition Team, we share the following insights:
In every discussion, the Trump Transition Team and Republicans in Congress concede there will be winners and losers. In general, they are accepting of this outcome but are open to minimizing immediate impacts with transition relief. Republicans emphasize, however, if provisions are restored outright it will be at the cost of a higher rate so the hurdle to adding/restoring provisions will be high. They are very confident their key constituencies are on board with the current approach and believe the Republican Conferences in the House and Senate will be unified behind the bill. This means the process could move quickly and that engaging early and often – in many cases now – will be important if influencing the substance of the legislation and transition rules is the objective.
There will also be considerable international implications if Republicans stick to this plan and impose a Border Adjusted Tax. Already, there is discussion of a potential World Trade Organization challenge, issues with treaties and the potential for retaliation from other governments where U.S. multinationals operate. How these issues play out in the media and through direct government-to-government engagement will play a role in shaping the legislation. Engaging with home country officials to have them weigh in on major issues could make the difference in influencing the final product.
Our team at FTI Consulting has worked on every tax and budget measure considered by Congress over the past thirty years – the last time generational tax reform happened. We have been working with Republican Leadership and Members on the Ways and Means and Senate Finance Committees for the past several years on tax policy and have been players in the debate leading up to this moment. Our professionals are engaged with the Trump Transition Team and have valuable insights and access to those who are actively determining tax policy and writing the new proposed law. We also have strong relationships with Congressional Democrats who will be sought for bipartisanship and will have an ability to weigh in and influence policy. Finally, FTI has deep relationships with governments around the world as a result of our global coverage, footprint and operations. We are positioned to assist in securing support from foreign governments to influence, moderate and/or drive policy and debate with the US government. Overall, we are well positioned to engage, advocate and influence at this critical point in the process and are ready to help you navigate this new course at a time when companies may need to throw everything they have at this issue.
We would welcome the opportunity to meet with you and your team to provide additional insights and to discuss how we could assist you in this critical and moment of transformation, opportunity and exposure. The new political and policy environment will produce generational change and our goal is to ensure your business is in the best position to control your fate.