“The Senate took an important step toward fundamental tax reform when Senate GOP leaders released the summary of the Senate Finance Committee’s tax reform bill,” Barry C. Melancon, CPA, CGMA, president and CEO of the American Institute of CPAs (AICPA), stated. “Congress is engaged in an ongoing process to achieve tax reform that we welcome.”
Melancon took the opportunity to call lawmakers’ attention to some of the accounting profession’s tax reform goals and concerns.
“First,” he explained, “we applaud expansion of the number of taxpayers who may use the cash method of accounting. Second, all passthrough entities should be treated similarly in any rate reduction. Third, Congress should allow owners of pass-through entities to deduct all of the state and local taxes paid in carrying on a trade or business.” Melancon also explained that partnerships are uniquely reliant on non-qualified deferred compensation arrangements. “Partnerships, generally unable to access public capital markets, must derive working capital from sources such as the unfunded, unsecured promise to pay retirement income to partners and employees after they retire,” he said. “Accordingly, partnerships rely on these arrangements as mandatory components of their partners’ and employees’ compensation packages to fulfill this need.”
“We will be vigilantly monitoring key issues for the profession as Congress considers reform of the nation’s tax code, and we urge tax writers to keep our priorities top of mind as the debate continues,” Melancon added.
Melancon acknowledged the work of Senate Finance Chairman Orrin Hatch (R-Utah) and House Ways and Means Committee Chairman Kevin Brady (R-Tex.) and their respective committees. He noted that in the last five years the AICPA has provided Congress with more than 100 comment letters, position papers and statements for the record to assist the tax reform effort and to advance good tax policy and effective tax administration.
To learn more about the CPA profession’s views on tax reform, visit the AICPA’s Tax Reform Resource Center.