U.S. Tax Reform Debate in Full Swing
Last week, House Republican leadership introduced a long-awaited tax reform bill that, among other things, would cut the U.S. corporate tax rate to 20% from 35%. Other proposed major changes to the corporate tax system would include:
territorial tax system that taxes domestic income but not foriegn income;
one-time repatriation tax on overseas profits;
25% tax rate for “pass-through” businesses (e.g., sole proprietorships, partnerships, S corporations);
temporary immediate expensing of capital assets; and
“partially limiting” the deduction for business interest expense.
House Speaker Paul Ryan has publicly stated that he would like to have the legislation through the House before the Thanksgiving recess. The House Ways & Means Committee is conducting its mark-up this week, where further changes are possible as Committee members negotiate to facilitate passage when the bill is brought to the floor for a vote. The Senate Finance Committee will also launch its parallel process, with the goal of having a final bill negotiated between the House and Senate conferees before year’s end.
Many of the tax reform bill’s proposed changes are in line with the National Association of Manufacturing’s (NAM) advocacy priorities for tax reform. NAM has established five priorities: (i) corporate tax rate of 15%; (ii) lower rates for small businesses and other “pass through” entities; (iii) a territorial tax system; (iv) preservation and enhancement of the R&D credit; and (v) incentives for the purchase of capital equipment. With the tax debate now in play, NAM is spearheading efforts to promote its agenda, and has set up a stand-alone website to encourage outreach to congressional leaders in support of these reforms. See Tax Bill, NAM Tax Reform Site and NAM Website. More Info: Jackson Morrill