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By Michael T. Lahti
We thought our clients would appreciate a summary of some of the federal legislation that may affect them.
Tax Overhaul
Legislative Purpose
Congressional tax-writers want a revamp of the tax code.
Bill Status
House: A blueprint for tax reform released in June 2016 calls for a 20 percent corporate tax rate; a shift to territorial taxes on overseas income under destination-based taxes; a border adjustability provision that would tax imported goods but exempt exports; three tax brackets at 12 percent, 25 percent and 33 percent for individuals; a 25 percent tax rate for pass-throughs; and a repeal of the estate tax and alternative minimum tax. Senate: Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) had been working on a dividends-paid corporate integration idea as a way to eliminate double taxes on corporate income. However, he hasn't released the plan and has said he is now focused on a broader tax reform effort. White House: The Trump administration's reform plan will be released within weeks, a White House official said Feb. 9.
Outlook
House: House Ways and Means Chairman Kevin Brady (R-Texas) and his staff are working on turning the blueprint into legislation. He said Feb. 7 that a bill could come as early as this summer. The border adjustment tax is facing opposition from big retailers and some members in the House and Senate over concerns it could raise costs for consumers. Senate: Hatch previously said he would like to hold hearings on the border adjustment tax, but said March 2 that Finance Committee members are looking at alternatives. White House: The administration has signaled its interest in using a border adjustment tax to help pay for a wall along the border with Mexico, but President Trump didn't specifically mention a border adjustment tax during his Feb. 28 address to Congress. White House press secretary Sean Spicer said March 27 the White House will be driving the tax reform effort.
Health Care
Legislative Purpose
(American Health Care Act) House Republicans on March 6 released legislation that would replace the Affordable Care Act. The bill would repeal many of the ACA's related taxes and retroactively roll back penalties for employers that fail to provide coverage and individuals who fail to obtain it. The bill also includes an advanceable, refundable, age-adjusted tax credit capped at individual income of $75,000 and for joint filers at $150,000.
Bill Status
House: Ways and Means and Energy and Commerce committees approved their portions of the bill along party lines March 9 with the House Budget following March 14. Facing pressure from members of the House Freedom Caucus and moderate Republicans, House leadership pulled the bill from a floor vote March 24.
Outlook
Conservative members of the House Freedom Caucus and Republican Study Committee and some Republicans in the Senate criticized the AHCA for creating a new entitlement program through the refundable tax credit and failing to immediately repeal all of the ACA's taxes. Others criticized the lack of a score by the Congressional Budget Office. After the AHCA's failure, It's unclear if House Republicans will continue efforts to repeal and replace the ACA. House Speaker Paul D. Ryan (R-Wis.) said March 28 that a health care bill remains a priority, but he did not offer a timeline for new legislation.
Estate Tax Repeal
Legislative Purpose
(H.R. 451, H.R. 198, H.R. 30, H.R. 631, S. 205) Several bills have been introduced in both chambers to repeal the estate tax.
Bill Status
House, Senate: Senate Finance Committee member John Thune (R-S.D.) and House Ways and Means Committee member Kristi Noem (R-S.D.) are the lead sponsors on companion repeal legislation, H.R. 631 and S. 205.
Outlook
House: The House GOP tax reform blueprint includes a repeal of the estate tax. White House: President Trump called for a repeal during his election campaign, replacing it with a capital gains tax for assets held until death.