GOP Releases New Tax Reform Framework

GOP Releases New Tax Reform Framework

Posted by Jeffrey M. Feingold on 10.05.17

The White House and Republican congressional leadership released a nine-page outline on September 27, 2017 to guide upcoming legislation on tax reform. This framework will help in configuring what will be an active, and likely debatable phase of tax reform.

Under the announced framework, the top individual tax rate would be 35% and the corporate tax rate would be 20%. The framework provides tax reform goals, however it does not provide legislative language, which would still need to be developed in the congressional tax-writing committees. Republicans have announced that their goal is to have tax reform legislation enacted by the end of the year.

Individuals

For individual taxpayers, the framework calls for:

  • Three tax brackets: 12%, 25%, and 35%. The income levels at which the three brackets would apply were not specified.
  • Repeal of the alternative minimum tax (AMT).
  • Repeal of the estate tax and the generation-skipping transfer tax.
  • Increased standard deduction amount
  • Increasing the child tax credit and providing a $500 credit for care of non-child dependents.
  • Taxing passthrough income at a maximum rate of 25%.
  • Eliminating most itemized deductions, including the deduction for state and local taxes, while preserving the deductibility of mortgage interest and charitable contributions.

Businesses

For businesses, the framework calls for:

  • An end to taxation of U.S. companies’ worldwide income and a move to a territorial system.
  • Limiting the deductibility of interest.
  • Eliminating deductions, at the tax-writing committees’ discretion, but the framework calls for the research and low-income housing credits to be retained.
  • For five years (or more), allowing 100% expensing of the cost of depreciable assets, except for buildings.
  • A one-time tax on accumulated offshore earnings, which would be taxed at two unspecified rates: One rate for cash and cash equivalents and a lower rate for other assets.

The next obstacle will be congress agreeing on a budget resolution, which is needed in order for tax reform to proceed under a budget reconciliation process.

This is the time for taxpayers to pay attention to a rapidly intensifying tax reform effort. We are always watching all news and information regarding tax reform here at Tax Point Advisors. Tax Point Advisors is always here to help, please call 800-260-4138 or fill out the form below and we will be happy to discuss how some of the reforms may or may not effect you this tax season.


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