The document discusses the potential implications of the Trump administration's tax reform plan for employers, highlighting proposed changes such as parental leave, dependent care savings accounts, and income tax rate reductions. It also addresses issues related to social security, immigration reform, and overtime pay, suggesting that businesses may face increased requirements and penalties while possibly benefiting from lower compensation expenses. The information is intended for educational purposes and does not constitute tax advice.

1. The Trump administration
Potential employer implications
as of April 26, 2017

2. Page 2
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3. Page 3 The Trump Administration: Potential employer implications
The Trump Administration’s tax reform plan
Potential employer implications
Plan provisions Trump campaign proposal Potential implications
Parental leave The Trump campaign proposed up to
six weeks of paid leave for up to 46%
of a worker’s normal wages for new
mothers caring for a new born child.
This amount would be paid as an
unemployment insurance (UI) benefit,
funded by reducing fraud in the UI
program.
 More stringent requirements for
employer responses to state
unemployment insurance claim
notices.
 Action on previous Administrations’
proposals to raise the federal
unemployment wage base to higher
than the current $7,000.
Dependent care
savings account
The Trump campaign proposed up to
$2,000 per year tax-free
employer/employee contributions to
pay for child care or elder care
expenses. Balances can roll over from
year to year for future qualitied
expenses.
 Reduction in current dependent care
assistance benefits of $5,000 per
year, resulting in added employment
tax for employer-provided day care
and dependent care assistance
benefits in excess of $2,000 per year.
 Cafeteria plan design change to
eliminate the current “use or lose” on
dependent care assistance flexible
spending accounts.

4. Page 4 The Trump Administration: Potential employer implications
The Trump Administration’s tax reform plan
Potential employer implications
Plan provisions Trump campaign proposal Potential implications
Income tax rate
reduction
Under the Trump Administration’s April
26, 2017 plan, the current seven
income tax brackets with a highest
rate of 39.6% would be consolidated
under Trump’s tax plan to three--10%,
25% and 35% and the standard
deduction ($6,350 for 2017) would be
doubled. Itemized deductions other
than mortgage interest and charitable
gifts would be eliminated.
 Businesses that pay employee
income taxes on bonuses, taxable
relocation, etc. (i.e., gross up) would
see a reduction in compensation
expenses.
 Businesses that reimburse
international assignees for US
income tax could likewise see a
reduction in compensation expenses.
Social Security Trump has signaled his intent to
preserve Social Security; however,
the Social Security trust fund is
projected to have dedicated resources
sufficient to cover benefits only
through 2034.
 One option suggested to extend the
life of the Social Security trust fund is
removing the cap on Social Security
wages, set at $127,200 for 2017.
 Another option would privatize Social
Security, potentially increasing plan
administration costs for businesses.

5. Page 5 The Trump Administration: Potential employer implications
The Trump Administration’s tax reform plan
Potential employer implications
Provision Trump campaign proposal Potential implications
Immigration reform In his pledge to deter illegal
immigration, Trump has indicated his
support of mandatory e-Verify. Since
employment is a significant incentive
for illegal entry into the US, expect the
Trump Administration to focus on
employers and their hiring practices.
 Businesses should consider
voluntarily registration for e-Verify
where they are not already required
to do so.
 Expect harsher consequences for the
use of invalid Social Security
Numbers on Forms W-2 and tighter
restrictions and enforcement on the
use of the Individual Taxpayer
Identification Number (ITIN).
IRS administration Recently, the IRS has refused to
reduce or abate late-deposit and filing
penalties where in the past, similar
cases on appeal would have resulted
in abatement or penalties reduced.
 The Trump Administration may direct
the IRS to return to previous penalty
abatement policies.

6. Page 6 The Trump Administration: Potential employer implications
The Trump Administration’s tax reform plan
Potential employer implications
Provision Trump campaign proposal Potential implications
Overtime pay Effective December 1, 2016, the
Obama Administration effectively
increased the pay of many salaried
exempt employees by raising the
salary threshold to $913 per week
($47,476 per year), double the current
amount. This salary test will be
adjusted for inflation every three
years, and is expected to rise to $981
per week ($51,000 per year) when it is
first updated on January 1, 2020.
 The Trump administration has
obtained another in a series of
extensions, until June 30, 2017, to
file its reply brief in the Fifth Circuit
case challenging the Obama
Administration’s overtime rule.
 Trump has vowed to overturn
executive orders issued by President
Obama, and this could be one that is
reversed, or the impact on business
lessened. Should that occur,
businesses could save not only on
wage expense, but on related
employment taxes such as Social
Security and state unemployment
insurance in those jurisdictions with a
high wage base.
.

7. Page 7 The Trump Administration: Potential employer implications
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