Anticipation of Overhaul Puts off Tax Payments by US Taxpayers

USA - United States of AmericaThe US Government has recently announced that it is facing a cash crunch issue lately because of the wealthy individuals and businesses looking forward to postponing their tax payments in the hope that Trump administration will soon announce the promising big tax cuts.

A news report quoting federal data and tax professionals have highlighted that many taxpayers are not in the mood to invest their money with the hope of paying less amount of tax at a later stage.

Brent Lipschultz who is the partner at the accounting firm PwC has made the following statement:

Clients do not want to overpay. They want to pay the government less now, knowing that they could be paying a lot less in the future.

According to the latest data, it is having an impact on the cash position of the Treasury Department. At the moment, it is having a fund of US$177 billion but the spending of the government is far exceeding receipts. The money is borrowed by the government to cover the difference between income and expenditure. However, a certain amount of limit is placed on the overall amount of debt and the Congress sets this limit.

CBS News

The US Government is almost close to reaching the debt ceiling since March this year as per the media reports. The day is not far when the Treasury Department would run out of options for raising the cash necessary for honouring its commitments. Steven Mnuchin who is the Treasury Secretary has requested Congress to increase the limit of debt by August. Congress has not received any kind of notification from the Treasury Department when the latter would be running out of funds.

The cash shortage level is worse than what it has been anticipated earlier this year. A report of Congressional Budget Office (CBO) was released last month in which it has pointed out that revenue is down by 3% than what it was speculated by CBO earlier in 2017.

In the report, CBO has said that taxpayers projected more income to the coming years than estimated previously, expecting the government to lower taxes.  All the selling investments are put off by the taxpayers and are hoping they have to pay less amount of tax after the cuts.

Capital Gains Tax” is based on the income with rich taxpayers paying around 23.8%. The US President has proposed to bring it lower to 20% and the House Republicans want it to be low further. However, the efforts of the government for overhauling tax code have run into some kind of problems because of competing priorities with the Republican party. By August, it was expected that the tax changes would be introduced but now the government is planning it to release in December for the introduction of new tax laws.

Steven Rudford

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