Companies from Dunkin’ Brands to Edwards Life Sciences have projected big future tax savings as they report earnings. But along with the cheering comes the reckoning, as businesses and individuals grapple with the repercussions of December’s federal tax overhaul.
Ups and Downs
The legislation was supposed to spur U.S. investment, especially by companies with cash overseas, but several large tech firms are saying little yet about doing so. Utilities expect to cut customer rates as tax bills shrink, yet that change is raising cash-flow concerns among credit analysts. Manhattan’s lofty real-estate market has stalled, as buyers wait for tax changes to push prices down, but sellers are reluctant to budge.
Kiss Some Tactics Goodbye
With the new law, money-losing companies can no longer turn to the Internal Revenue Service for what in essence was a retroactive federal tax refund by applying current losses to past tax bills. With new caps on the amount of local and state income taxes Americans can deduct from their federal tax bills, local tax increases are now more costly and thus politically unpalatable. Instead, municipal fees will likely keep rising for garbage collection, ambulance rides and other services.
A New Leader at the IRS?
And a new tax on executive pay at nonprofits will hit some hospital groups harder than others, while changes to itemization mean donor-advised charitable funds are booming. Meantime, President Trump is closer to nominating California tax lawyer Charles Rettig to run the IRS.
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