On February 9th, alliantgroup Senior Director and former U.S. Congressman Rick Lazio was interviewed by Yahoo! Finance and offered his forecast on the current prospects for tax reform.

With Congress and the White House focused on improving both productivity and growth, below are three key takeaways from Lazio’s interview on what tax advisors and U.S. businesses should anticipate during the coming year:

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We should expect to see tax reform legislation by mid-to-late spring, with a goal of getting a bill on the President’s desk before the August recess.

With the GOP in control of the White House and both the House and Senate, Rick described this year as a “once in a generation opportunity” to pass comprehensive tax reform. For tax reform to finally become a reality, the White House will need to be involved in pushing legislation toward the finish line—and all signs at the moment point to an administration that is fully engaged and willing to spend political capital to make this a reality.

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There is a general agreement on a blueprint for tax reform. Paying for it is another story.  

There is general agreement among the House, Senate and White House to:
A) Collapse the marginal tax rates into three brackets
B) Lower corporate rates down from 35% to 15-20%
C) Ensure that pass-throughs are treated the same way as corporate entities so the tax code is not dictating the entity type a business embraces

There is disagreement over how to pay for the above proposals, with ideas ranging from capping deductions on high income earners to a border adjustment tax. Those details will ultimately decide the fate of reform, Lazio said.

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There are talks of potentially expanding the Research and Development Tax Credit. 

The focus of tax reform will be to improve slowed productivity and growth, and Rick specifically points to the need for stronger investment in research and development to increase economic performance. As such, there have been talks of further expanding the Research and Development (R&D) Tax Credit, which Rick describes as one of the more popular tools that Congress agrees on to help all kinds of businesses, be they small, large or mid-size companies.

However, while the credit is currently well-claimed by larger businesses, Rick notes that the credit is currently overlooked by the majority of small businesses—which is something that will need to change to ensure long-term economic success.

“Statistically, less than one in five small businesses are even aware they are eligible for the R&D Tax Credit,” said Lazio. “So, that’s very much underutilized.”

“So the focus will really be on how we get growth back up to 3%…which is where we ought to be growing if we want to create the kind of jobs and the kind of income we want.”

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