Ever since Americans voted to return former President Donald Trump to the White House, business executives have scrambled to pinpoint exactly what fiscal scenarios to plan for under his new administration.

Questions are swirling on nearly every tax issue as executives wade through the myriad tax changes proposed by the President-elect on the campaign trail, as well as potential changes to existing tax law that could be revamped, according to Big Four experts at the Big Four. Deloitte & Touche and Ernst & Young during separate press conferences held this week. Trump’s opinion on individual taxes grabbed the headlines during his campaign, including his proposals to tax extra pay, tip income and Social Security benefits and create a tax credit for family caregivers.

Trump also drew the attention of businesses with his proposal to impose a base tariff of 10%-20% on all US imports, as well as a 60% tariff on those from China. It also floated down profit tax rate to 20% from 21% or to 15% for companies that manufacture their products in the US, according to the Tax Foundation. And companies are also grappling with how and whether Trump will protect trillions of dollars in tax cut provisions in 2017. The Tax Cuts and Jobs Act that will set at the end of 2025.

A potentially fast pace: “You have to keep up with it”

It all adds up to a “huge agenda” on the tax policy front for MPs as they consider further tax cuts in addition to those expected. It costs $4.6 trillion on the extension of Trump’s TCJA tax cuts, Anna Taylor, deputy leader of Deloitte & Touche’s tax policy group, said in the firm’s briefing earlier this week. Businesses are also trying to figure out how quickly the changes to the tax laws will happen.

Ernst & Young Americas assistant vice president of tax Martin Fiore said his firm is grappling with how to advise their clients’ financial teams to prepare for TCJA extensions and other evolving tax policy matters, noting that this time around knowledge and Trump’s experience with the legislation. could speed up the process. In preparation for this, he cautions that clients should ensure they understand any proposed legislation, model its various potential impacts on their own businesses and then report them to stakeholders.

“We see this as something that’s moving very quickly,” Fiore said during the briefing earlier this week. “The whole concept of understanding, then monitoring through modeling and reporting to stakeholders as the process happens is critical. It’s like telling a story and you have to keep up with it.”

Early Termination, IRA Changes?

Of course, it’s too early to know exactly what fiscal policies the Trump administration will focus on. But some of the tax experts who spoke this week said they expect Trump and Republican lawmakers to at least use their new trifecta of power to kill some elements of the Inflation Relief Act of 2022, which has been a signature legislative achievement for President Joe Biden.

“In general, legislation passed on a partisan basis is almost certainly on the chopping block for repeal in one way or another,” EY global tax policy leader Aruna Kalyanam said in the briefing, noting that surgical changes are more likely than a full repeal because many of the projects benefit Republican states and because a full repeal would disrupt energy markets. “Overall, it’s unlikely that Congress will do anything in the way of a retroactive repeal because it’s really causing some kind of chaos in the market,” Kalyanam said.

The massive IRA has funneled billions of dollars into clean energy projects such as a $200 million wind tower expansion manufacturer CS Wind’s facility in Pueblo, Colorado and tax credits for electric vehicles that target combating climate change. The act also allocated an increase of 80 billion dollars at the Internal Revenue Service until 2032 and established 15% alternative minimum corporate tax.

Rather than a repeal that would inject a lot of “uproar” into the energy industry, Kalyanam said lawmakers could do what she called an “early termination,” which would involve cutting off the last few years of tax credits and generate significant revenue savings. . At the same time, she said certain types of programs in the IRA enjoy universal support, such as those related to carbon capture and sequestration and clean hydrogen.