President Trump campaigned heavily on reducing corporate tax rates, and on April 27, 2017 he released the most significant and specific proposal on tax policy of his presidency.  In broad terms, the proposal cuts the base corporate rate to 15% but would also eliminate many corporate deductions.
 
For individuals, the plan reduces the seven tax brackets for individuals down to three tax brackets: 10%, 25%, and 35%.  It would double the standard deduction, but would also eliminate many specific deductions including the AMT, the Death Tax, and other targeted tax breaks.  The administration is selling the idea that many individuals may be able to file their taxes on a postcard, with a much simpler process.
 
Sean Spicer laid out the purpose of the proposal clearly, stating that the goal was to “provide tax relief to our corporations that will help grow jobs and to middle Americans.”
 
And rate reduction is not just political lip service.  The United States has just about the highest corporate tax rate in the world.  An August 2016 report from Tax Foundation found that the United State has the third highest corporate income tax rate, exceeded only by the United Arab Emirates and Puerto Rico.  Europe and other industrialized nations tend to have a much lower rate.
 
However, one major aspect of the House Republican Proposal is not currently included.  The Border Adjustment, which would tax imports but provide tax relief for exports is not part of the White House’s stated agenda.  Though this is a one page proposal, and it is highly likely the plan will go through major revisions if it is passed.
 
There are some real challenges that must be overcome.  The law, when introduced, would need to be passed by reconciliation, which was unsuccessful earlier this year with the AHCA.

With the Border Adjustment currently out, the clash of the retailers versus the manufacturer exporters becomes less problematic.  But deficit hawks may the most influential caucus in DC right now.  With a federal government budget battle looming, the timing is not ideal.
 
However, we need to grow our economy, and it’s time to address the tax code.  I’m just about the same age as the last major reform effort, and the world has changed significantly.  We cannot compete in a global economy with Chad or Equatorial Guinea’s tax code based on economies from thirty years ago.
 
Tax Foundation concluded during the campaign that candidate Trump’s plan would increase the economy from 6.9% to 8.2%.  Couldn’t we use some of that growth here in Illinois?

By Colin Dalough, Director of Government Affairs & Business Development

The recent fight over the Fiduciary Rule has me thinking back to the last major change from the Department of Labor, the Overtime Rule.  If you remember, the DOL issued a new rule for overtime last year under direction from President Obama.  It raised the salary and compensation levels for executive, administrative, and professional workers’ exemptions and would have made millions of workers eligible for overtime that were not previously.
 
However, the rule was halted by a court in Texas days before it was set to go into effect.  Unfortunately, many businesses had already made significant changes by the time the rule was frozen.  Many negotiated millions of dollars in raises, meanwhile the underlying rule evaporated and left them with a lose-lose scenario. 
 
Now, the Department of Labor is defending its Fiduciary Rule in a similar fashion.  The Fiduciary Rule expanded the scope of the concept of a fiduciary, or an individual who has a legal duty to you to act in the best interests of their client.  That sounds good in theory, but the expansion now encapsulates any professional providing even a recommendation and could include individuals that are not compensated for their advice.  These individuals were previously held to a stringent but lower standard.
 
Nevertheless, the rule was set to be enacted on April 10, 2017, when a last minute delay was filed in the Federal Register with a new implementation date of June 9, 2017.  There is widespread belief that the rule could be modified before then.
 
However, to change a Final Rule the Department of Labor would need to follow administrative law requirements with notice and comment, and it’s unclear whether they could pass all the administrative hoops before June 9.
 
So, employers that wrote up new job descriptions and renegotiated job duties are once again waiting, while the feds decide what they’d like to do, and herein lays the rub.  While greater regulatory burden is certainly not desirable, the current climate of instability is not ideal either and this back and forth is leaving many businesses holding the bag.
 
The Department of Labor’s Overtime Rule actually went into effect in practice for huge swaths of the economy because very few companies were willing to revoke raises they were forced to offer to employees.  Now they’re waiting to see if the feds will enforce this new Fiduciary Rule as well, even if it’s effectively moot in the end.
 
Springfield
 
Finally, HB198 passed through committee in Springfield and is now headed to the floor of the House.  With House Amendment 1, it introduces a minimum wage that would increase statewide to a maximum of $15/hour by calendar year 2022.  It does not look like the bill has the necessary votes to overcome a likely veto, but we will continue to monitor its trajectory closely.