The result of tax reform

Congress recently passed a bill to revise the country’s tax laws. A potentially good name for this new law would be the Tax Lawyer and Accountant Full Employment Act of 2017.

The U.S. tax system is a complex, jury-rigged contraption. In the best of circumstances tampering with any part invariably triggers collateral consequences. This new law is some 500 pages long, and it is doubtful the majority of the representatives and senators who voted for it read it, fully know it provisions, or have a good understanding of its long term results.

The Republicans performed major surgery on the tax code with only a short time for analysis. Therefore, it is guaranteed this law will open up new opportunities for experienced and competent accountants and tax lawyers to find new ways for their wealthy clients to avoid paying taxes. For instance the tax new tax law reduces the corporate income tax rate from 35 to 21 percent. This could encourage individual taxpayers to shelter income in a corporation to avoid the higher rates on income taxes. While this could happen under current law, the 35 percent corporate tax limited the benefit for this type of a tax-reduction strategy. Also, the law will allow corporations to take higher deductions than individuals for state and local taxes.

To summarize, there will be numerous unintended consequences as a result of this new law. And it is a very rare situation where unintended consequences are a positive good.

JOHN PIEPHO, Cape Girardeau