Bill Lowers Corporate Rates, Scales Back Tax Breaks and Eliminates the Estate Tax
Source: By Chris Clayton, DTN/Progressive Farmer • Posted: Wednesday, November 8, 2017
WASHINGTON (DTN) — House Republicans released a long-awaited tax-reform and tax-cutting plan that lowers tax rates for corporations and families, but forces both businesses and families to give up or reduce some favorite long-standing tax breaks.
“This is a complete redesign of the (Tax) Code,” said Rep. Kevin Brady, R-Texas, chairman of the Ways and Means Committee.
Brady’s committee is set to mark up and debate the plan in committee starting next Monday.
Looking for a major legislative victory, President Donald Trump applauded the introduction of the bill. He noted his priorities are to bring tax cuts to the middle class, eliminate loopholes and slash business tax rates. The president warned of the coming effort to lobby against the legislation.
“The special interests will distort the facts, the lobbyists will try to save their special deals, and some in the media will unfairly report on our efforts,” the president said. “But my Administration will work tirelessly to make good on our promise to the working people who built our nation and deliver historic tax cuts and reforms — the rocket fuel our economy needs to soar higher than ever before.”
The bill would cut the corporate tax rate from 35% to 20%, a foundation set early in the debate over tax reform. Businesses would get immediate expensing of capital costs, but business interest would be limited and other tax deductions and tax credits would go away.
For individuals and families, the bill cuts individual tax brackets from seven to four: 39.6%, 35%, 25% and 12%. The standard deduction would be doubled, but limit state and local tax deductions, as well as other items on the Schedule A. The Child Tax Credit would be boosted for families from $1,000 per child to $1,600. A special $300 tax credit would be added for people who take care of a parent or another non-child dependent.
The bill would limit mortgage interest deductions at $500,000. That prompted the National Association of Realtors and National Association of Home Builders to oppose the tax plan.
In a victory for farm groups who pressed on the estate tax, the bill doubles the estate-tax exemption to $11 million for individuals, up from $5.49 million. The estate tax is phased out entirely after 2023.