As President Trump takes his tax reform message on the road and members of Congress continue to debate the structure and timing of a proposed bill, repeal of accelerated depreciation is the revenue raising provision that most tax, financial and other business professionals are willing to accept in exchange for a lower corporate tax rate, according to a recent poll by KPMG LLP.
In the poll of 1,250 respondents, conducted during a recent webcast, one-third (33 percent) identified accelerated depreciation as their most favored revenue raiser, while 20 percent pointed to the now dormant border-adjustable tax and 13 percent said non-deductibility of interest.
When asked how low the corporate tax rate would need to go to be meaningful for their company, almost one-third (30 percent) said 20 percent while almost one-quarter (24 percent) said 25 percent, with 19 percent citing the Administration’s preference of 15 percent.
“While achieving tax reform before the end of this year is still possible, many in the business community recognize that reform can’t come without some tradeoffs or concessions on all sides,” said Jeffrey C. LeSage, Vice Chairman – Tax at KPMG. “We’ve been hearing from our clients and others that they have been giving serious thought to a variety of outcomes as the debate has been proceeding.”
While 29 percent of respondents said that uncertainty about tax reform is having no effect on their current operations, 21 percent said it is creating challenges with corporate innovation planning and 13 percent said it is holding them back on making long-term capital investment decisions.
“All of the uncertainty puts companies in a difficult spot in terms of their future plans, which
makes modeling various outcomes for potential tax reform scenarios highly important,” added John Gimigliano, principal in charge of Federal Tax Legislative and Regulatory Services in the Washington National Tax practice of KPMG. “Companies are being forced to make long-term investment decisions without knowing what lies ahead.”
The survey also revealed that most respondents polled (49 percent) continue to believe that an overhaul of the U.S. tax code is likely to occur in 2018. A similar KPMG poll conducted in March, had 53 percent of respondents looking to next year for tax reform.
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