Benjamin Franklin once famously said that, “In this world nothing can be said to be certain except death and taxes.” President Trump’s recent tax reform proposal is the administration’s attempt to alleviate one of these certainties of life.

President Trump’s proposal, which was released on Sept. 27, contained the following changes for individual taxpayers:

  • Increasing the standard deduction to $24,000 for married taxpayers filing jointly, and to $12,000 for single taxpayers.
  • Consolidating the current seven income tax brackets to three brackets: 12 percent, 25 percent and 35 percent.
  • Increasing the Child Tax Credit amount, and increasing the income levels at which the Credit begins to phase out.
  • Repealing the Alternative Minimum Tax.
  • Eliminating most itemized deductions, although the deductions for home mortgage interest and charitable contributions would remain in place.
  • Eliminating the estate tax.

Congress was supposed to issue the draft of the legislation on Nov. 1, but delayed the release after failing to finalize some of the details.

One apparent sticking point is the elimination of itemized deductions, especially the deduction for state and local taxes. The elimination of this deduction is estimated to raise between $1.3 trillion and $1.8 trillion over a decade, making it a significant revenue-raiser. Taxpayers in high-tax states, such as New Jersey and New York, however, will be significantly affected if this deduction is eliminated.

Since the release of the president’s tax reform proposal, the Trump administration has indicated that they are open to limiting the deduction for state and local taxes, instead of fully eliminating the deduction. The House Ways and Means Committee Chairman, Kevin Brady, however, has indicated that the legislation will fully eliminate the deduction for state and local taxes. The latest possible compromise is that a deduction will remain in place for state and local property taxes, but not for state and local income taxes.

The other debate that has arisen is whether a limit would be imposed on pre-tax contributions to 401(k) plans, which for four decades have helped millions of Americans save for retirement. The current maximum amount that can be contributed annually is $18,000. The idea that has been floated is to limit 401(k) contributions to $2,400 per year.

Limiting 401(k) contributions would generate tax revenue to offset the tax cuts of President Trump’s plan. Limiting the contributions, however, also runs the risk of alienating taxpayers who participate in their employers’ 401(k) plans. Since most employers no longer offer a pension benefit, a 401(k) plan is an employee’s only option for retirement savings. Limiting 401(k) contributions also runs the risk of alienating Wall Street, because many companies and institutions generate fees for managing 401(k) plans. Substantially lowering the amount that can be contributed to 401(k) plans will affect Americans at all income levels.

Returning to Franklin’s quote about death and taxes, what about eliminating the estate tax? Currently, the Federal estate tax is only imposed on single taxpayers who are worth $5.49 million or more at their death; married couples are taxed if their combined wealth is $10.98 million and above. The non-partisan Tax Policy Center has estimated that only 5,000 families nationwide are expected to pay estate tax this year. So the elimination of the estate tax will not affect the vast majority of Americans.

For businesses, the Trump proposal suggests the following changes:

  • Limiting the maximum tax rate for sole proprietorships, partnerships, and S corporations to 25 percent.
  • Reducing the corporate tax rate to 20 percent from the current maximum rate of 35%.
  • Allowing businesses to write off the cost of new investments, instead of depreciating the investment over several years.

The theory is that businesses, with the savings from these tax cuts, would invest and spend more, boosting demand for goods and services and pushing wages up. A report by tax experts from Boston University and MIT generally supports this view, finding that the cuts would boost wages by 4 percent to 7 percent after inflation. Another report, however, by the Tax Policy Center found that middle-income taxpayers would receive less than 10 percent of the benefit of a corporate tax rate cut, while the top 20 percent of taxpayers would receive about 70 percent of the benefit.

The president’s proposal was released on Sept. 27, and he wanted a bill on his desk by year-end. House and Senate Republicans are now hoping to pass separate tax bills before Thanksgiving, resolve the differences in the two bills in December, and send a final version to the president for signature before the first of the year.

Besides the certainty of death and taxes, it looks like we can also be certain that nothing is certain when it comes to tax reform legislation.