New tax plan is a work in progress that needs advisers’ input

The pace and​ scope of action in Congress last week — including the House vote to repeal Obamacare and a House committee’s approval of a Dodd-Frank replacement bill that scraps the Labor Department’s fiduciary rule — might make Mr. Trump’s tax proposal feel like old news. But rest assured, we’re just getting started.

The one-page plan released on April 26 was long on tax cuts that many advisers could cheer, but short on details. For example:

Simplify the marginal income-tax rates down from seven to just three: Great — maybe. What income levels will comprise the bracket for each rate?

Double the standard deduction: Wow! But a few of those itemized deductions that some of your clients depend on, like for state and local taxes, would get lost in the shuffle.

One of the bullets of the plan entails “Providing tax relief for families with child and dependent care expenses.” Super! In what way?

(More: What advisers should know about the Trump tax proposal)

A few aspects of the proposal could directly benefit advisers’ businesses. As senior columnist Jeff Benjamin reported, the plan has a 15% cap on so-called pass-through entities, including limited partnerships, limited liability corporations and S-corporation tax structures commonly used by registered investment advisers. And the alternative minimum tax? Gone.

But one concern our reporters heard time and again from advisers was over how to pay for these changes. Getting rid of the AMT alone, which only affects 4.5 million taxpayers, would reduce tax revenue by $35 billion in 2017, according to the Tax Policy Center.

The one-sheeter provided by the White House mentioned eliminating tax breaks that mainly benefit the wealthy and those for special interests, and a one-time tax on trillions of dollars held overseas. But it’s hard to figure out what would be needed to accomplish revenue-neutral tax reform — a goal of many fiscal conservatives — without more details about the cuts, and by relying heavily on notoriously unreliable economic growth forecasts to make up the difference.

(More: Trump’s plan to ditch AMT welcomed by advisers, but tax savings may be minimal)

Speaking of fiscal conservatives, Mr. Trump will no doubt hear from many of them when Congress begins to put a tax reform proposal together. House Speaker Paul Ryan is a full-on tax wonk who once ran the Ways and Means Committee and has pondered over his career how to best use tax reform to spur the economy, without exploding the debt.

The road ahead will be long, windy and bumpy, but that doesn’t mean reason and compromise can’t eventually triumph. Mr. Trump’s one-page proposal included mention of listening sessions to receive input from stakeholders throughout the month of May. Why not send the president a letter with yours?