{"id":50286,"date":"2017-11-03T06:11:42","date_gmt":"2017-11-03T06:11:42","guid":{"rendered":"https:\/\/www.biphoo.com\/bipnews\/?p=50286"},"modified":"2017-11-03T06:11:42","modified_gmt":"2017-11-03T06:11:42","slug":"republican-plan-delivers-permanent-corporate-tax-cut","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/news\/republican-plan-delivers-permanent-corporate-tax-cut.html","title":{"rendered":"Republican Plan Delivers Permanent Corporate Tax Cut"},"content":{"rendered":"

Republican Plan Delivers Permanent Corporate Tax Cut<\/span><\/strong><\/span><\/h2>\n

Republican Plan Delivers Permanent Corporate Tax Cut:- Republican lawmakers unveiled a sweeping rewrite of the tax code on Thursday, outlining a $1.5 trillion plan that will deliver a significant tax cut for corporations and more modest savings for middle-class families while tilting the United States closer, but not entirely, toward the kind of tax system long championed by businesses.<\/span><\/p>\n

The House plan, released after weeks of internal debate, conflict and delay, immediately ignited a legislative and lobbying fight as business groups, special interests and Democrats began tearing into the text ahead of a Republican sprint to get the legislation passed and to President Trump\u2019s desk by Christmas. Lawmakers appeared unfazed by the blowback and scheduled the first official \u201cmarkup\u201d of the bill for Monday.<\/span><\/p>\n

\u201cWith this plan, we are making pro-growth reforms, so that yes, America can compete with the rest of the world,\u201d said Speaker Paul D. Ryan of Wisconsin.<\/span><\/p>\n

The bill is heavily weighted toward business, which would receive about $1 trillion in net cuts, or two-thirds of the total, according to calculations by the Joint Committee on Taxation. At its center is a proposal to permanently cut the corporate tax rate to 20 percent from 35 percent \u2014 a change that is estimated to reduce federal revenues by $1.5 trillion over the next decade alone.<\/span><\/p>\n

For individuals, the plan establishes three tax brackets \u2014 12, 25 and 35 percent \u2014 instead of the seven that exist now and maintains a top rate of 39.6 percent for millionaires. The bill would also eliminate the alternative minimum tax, which is expected to hit 4.5 million families in 2017, and would roughly double the standard deduction for middle-class families. It would not, as many had feared, make any changes to the pretax treatment of 401(k) plans.<\/span><\/p>\n

Americans will still be able to make \u201cboth traditional, pretax contributions and \u2018Roth\u2019 contributions in the way that works best for them,\u201d Republican lawmakers said in their talking points.<\/span><\/p>\n

But the legislation includes several land mines that could complicate its passage, including limits on the popular mortgage interest deduction and caps on the state and local tax deduction, as well as its overall cost. Several Republicans from the high-tax states of New York and New Jersey said the bill would need to change to gain their support, while powerful trade groups representing the real estate industry and small businesses blasted the bill as ineffective and harmful to Americans.<\/span><\/p>\n

\u201cContrary to their assertions, the Republicans are picking winners and losers,\u201d Jerry Howard, the chief executive of the National Association of Homebuilders, said in an interview. \u201cThey are picking rich Americans and corporations over small businesses and the middle class.\u201d<\/span><\/p>\n

Meanwhile, Senate Republicans are working on their own tax bill, and on Thursday, Senator Bob Corker, Republican of Tennessee, lobbed a grenade into the House plan over its cost.<\/span><\/p>\n

\u201cAs I have made clear from the beginning of this debate, it is my hope that the final legislation \u2014 while allowing for current policy assumptions and reasonable dynamic scoring \u2014 will not add to the deficit, sets rates that are permanent in nature and closes a minimum of $4 trillion in loopholes and special interest deductions,\u201d Mr. Corker said.<\/span><\/p>\n

Representative Kevin Brady, Republican of Texas and the chairman of the House Ways and Means Committee, said that the House plan had the \u201cfull support\u201d of Mr. Trump and predicted that it would be on the president\u2019s desk this year. Anticipating the resistance from industry groups, Mr. Brady said, \u201cWe\u2019re going to prove them wrong once and for all.\u201d<\/span><\/p>\n

Representative Peter Roskam, Republican of Illinois and a member of the Ways and Means Committee, said he was bracing for the lobbyist onslaught but would not be deterred.<\/span><\/p>\n

\u201cWe\u2019ve just finished the opening ceremonies of the lobbyist Olympics. My phone has all kinds of messages and there are all kinds of criticisms,\u201d he said. \u201cThe notion of just defending the status quo is insufferable, and we\u2019re not going to do it.\u201d<\/span><\/p>\n

The bill is estimated to cost $1.5 trillion over a decade, and lawmakers must keep it at that amount if they are to pass it along party lines and avoid a filibuster by Democrats. Lawmakers have been scrambling for days to find revenue to offset tax cuts that will cost trillions of dollars. That has prompted a host of changes on the individual side, including repealing tax breaks for things like medical expenses, moving expenses, student loan interest and adoption, as well as making some business tax breaks temporary.<\/span><\/p>\n

The benefits for individual taxpayers will be mixed and depend largely on where they fall on the income scale, where they live and the types of tax breaks they tend to claim.<\/span><\/p>\n

Those making up to $24,000 will pay no income tax. For married taxpayers filing jointly, earnings up to $90,000 would be taxed in the 12 percent bracket; earnings up to $260,000 would fall in the 25 percent bracket; and earnings up to $1 million would be taxed at the 35 percent rate. For unmarried individuals and those filing separately, the bracket thresholds would be half of these amounts, other than the 35 percent bracket, which would be $200,000 for unmarried individuals.<\/span><\/p>\n

The proposal roughly doubles the standard deduction for middle-class families, expanding it to $24,000 for married couples, from $12,700, and setting it at $12,000 for individuals, from $6,530 today. Republicans also plan to expand the child tax credit to $1,600 from $1,000 and add a $300 credit for each parent and nonchild dependent, such as older family members, though that credit would expire after five years.<\/span><\/p>\n

But it also tightens rules for claiming the child tax credit, a change that would hit immigrant parents whose children were born in the United States. Filers would need to provide a \u201cwork-eligible Social Security number\u201d rather than just a taxpayer identification number in order to claim the credit. The left-leaning Center on Budget Policy and Priorities said the bill would roll back eligibility for about three million children in working families, including about 80 percent of whom were born in the United States.<\/span><\/p>\n

The bill includes a host of other changes that will affect taxpayers in different ways. For instance, it repeals certain tax credits, including a 15 percent credit for individuals aged 65 or over or who are retired on disability. Right now, those individuals can claim up to $7,500 for a joint return, $5,000 for a single individual, or $3,750 for a married individual filing a joint return.<\/span><\/p>\n

The House bill would entirely repeal that tax credit. It would also repeal the adoption tax credit, no longer allow deductions for tax preparation and repeal credits for alimony payments. And deductions for moving expenses would no longer be allowed.<\/span><\/p>\n

One of the biggest flash points is a proposed change to the popular mortgage interest deduction. Under the Republican plan, existing homeowners can keep the deduction, but future purchases will be capped at $500,000, down from the current $1 million limit.<\/span><\/p>\n

The National Association of Realtors came out swinging against the bill, suggesting a huge fight awaits over how real estate is treated.<\/span><\/p>\n

\u201cEliminating or nullifying the tax incentives for homeownership puts home values and middle-class homeowners at risk, and from a cursory examination this legislation appears to do just that,\u201d said William E. Brown, the president of the association. \u201cWe will have additional details upon a more thorough reading of the bill.\u201d<\/span><\/p>\n

Mr. Howard of the homebuilders group said the bill was a broken promise.<\/span><\/p>\n

\u201cIt puts such severe limitations on homebuyers\u2019 ability to use the mortgage interest deduction that home values will fall,\u201d he said.<\/span><\/p>\n

Another area of contention is the bill\u2019s treatment of the state and local tax deduction, which is popular among many middle- and upper-middle-class taxpayers in high-cost states like New Jersey, New York and California. The House bill would limit the deduction to just property taxes, rather than state and local income taxes and general sales taxes, and cap the benefit at $10,000.<\/span><\/p>\n

Several Republican lawmakers said they would oppose the bill in its current form, including Representatives Leonard Lance and Frank A. LoBiondo of New Jersey.<\/span><\/p>\n

The proposal will double the estate tax exemption to roughly $11 million, from $5.49 million, meaning families can avoid paying taxes on large inheritance. And it eventually repeals the estate tax altogether, phasing it out entirely in six years.<\/span><\/p>\n

Business groups that include large multinationals praised the bill effusively for lowering corporate rates permanently and sharply, and for overhauling the international tax system.<\/span><\/p>\n

For the first time, the United States is proposing to effectively levy a global minimum tax of 10 percent, which would apply to income that high-profit subsidiaries of American companies earn anywhere in the world. The effort is aimed at preventing companies from shifting profits abroad and grabbing back some of the tax revenue on income earned overseas. Those profits are currently not taxed until they are returned to the United States, giving companies an incentive to keep that money offshore since they are taxed at the current corporate tax rate of 35 percent.<\/span><\/p>\n

The White House has said more than $2.5 trillion in American profits are held offshore.<\/span><\/p>\n

The bill would force companies to pay a one-time 12 percent tax on liquid assets held overseas, like cash. The tax, which is reduced from the current 35 percent tax rate, would be payable over eight years. For illiquid assets, like equipment or property, the tax rate would be 5 percent.<\/span><\/p>\n

It would also force American subsidiaries of foreign-owned companies to pay a 20 percent excise tax on any payments sent back to foreign affiliates.<\/span><\/p>\n

Neil Bradley, the chief policy officer at the U.S. Chamber of Commerce, called the bill a \u201chome run\u201d for economic growth and warned other groups against blocking it. \u201cEveryone\u2019s going to look at this and find something they don\u2019t like,\u201d Mr. Bradley said. \u201cSo they are going to have to decide? Am I going to help get this done?\u201d<\/span><\/p>\n

Among those less sanguine about the bill are small businesses, which said the bill does not go far enough to help them reduce their tax burden. Republicans stuck to their promise of lowering the tax rate for \u201cpass through\u201d businesses to 25 percent. But to prevent the rate from becoming a loophole for all sorts of individuals, tax writers have created a formula they say will ensure that business owners will pay a higher individual tax rate on income that they receive as wages. The formula would be applied based on the circumstances of the business.<\/span><\/p>\n

That provision is not enough to satisfy the National Federation of Independent Business, which said in a statement it is \u201cunable to support the House tax reform plan in its current form.\u201d<\/span><\/p>\n

Placing even more pressure on lawmakers, the Peter G. Peterson Foundation is planning to spend $6 million on a nationwide ad campaign, including a TV commercial, that warns against a tax plan that adds to the national debt.<\/span><\/p>\n

The message of the campaign is that overhauling the tax code \u201cshould grow the economy, not the debt,\u201d said Michael A. Peterson, the president and chief executive of the foundation, which advocates reining in federal budget deficits.<\/span><\/p>\n

Source:-\u00a0https:\/\/www.nytimes.com\/2017\/11\/02\/us\/politics\/tax-plan-republicans.html<\/span><\/p>\n

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