President Trump's first budget proposal provided no new information on tax reform, but included three narrow tax proposals to strengthen IRS enforcement.
The three provisions would:
- Require Social Security numbers to claim the earned income and child tax credits
- Grant Treasury the authority to regulate return preparers
- Expand IRS authority to automatically correct certain return errors
The provisions were somewhat of a surprise considering how unpopular the IRS has been with Republican lawmakers over the last several years. Presidential budgets do not carry the force of law and should be considered statements of policy goals.
Trump's budget does pledge to enact tax reform, reinforcing that it remains a top priority. But the budget itself only repeats the same bullet points from the outline without elaboration (see Tax Legislative Update 2017-04 for more information). The budget assumes tax reform is revenue neutral, but Mick Mulvaney, the director of the Office of Management and Budget, made clear that the revenue goal was merely a placeholder for administrative convenience and not a statement of policy. Administration officials continue to send mixed signals on whether they want tax reform to be revenue neutral.
The budget also includes a list of tax expenditures (revenue losses from exemptions, credits, and other preferences in the tax code) with a promise to examine their effectiveness. But this list is produced annually by Treasury, and these provisions were always expected to be assessed as part of tax reform.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.