written by Michael Wirth
Lawmakers on both sides of the aisle spent much of June debating and discussing tax reform, with neither side providing details of what a comprehensive tax reform package could look like before year-end. At the same time, several bipartisan tax bills have been introduced in Congress, which could see their way to passage.
Last year, House Republicans unveiled their “Better Way Blueprint,” setting guidelines for tax reform, including lower individual tax rates, a reduced corporate tax rate, and a border adjustment tax (BAT), among other measures. House Speaker Paul Ryan, R-Wisc., hopes this tax reform will be accomplished in 2017.
Speaker Ryan spoke at a New Balance shoe factory in Massachusetts on July 20, stressing the need to “level the playing field” for U.S. companies and their foreign competitors. Ryan believes that cutting the corporate tax rate from its current 35 percent rate to a 20% corporate rate is “very realistic.”
However, little has been said about how to pay for these tax cuts. Republicans in the House have billed the BAT as more effective way to pay for tax cuts than closing loopholes in the tax law, because it would raise more than $1 trillion over the next decade by effectively taxing imports while exempting exports from taxation.
Orrin Hatch, chair of the Senate Finance Committee, requested recommendations on individual, business and international tax reform. “After years of committee hearings, public statements, working groups, and conceptual exercises, Congress is poised to make significant steps toward comprehensive tax reform,” Hatch said.
Other Tax Legislation
In June, the House passed HR 1551, a bipartisan bill. The legislation generally modifies the tax credit for advanced nuclear power facilities.
A number of other bipartisan stand-alone tax bills have been introduced in Congress recently. They include:
- The Invent and Manufacture in America Bill, a bipartisan bill that would enhance the research tax credit. Generally, the bill would increase the value of the credit by up to 25% for qualified research activities.
- The Graduate Student Savings Bill, introduced by a group of Senate Democrats and Republicans. The bill would generally allow funds from a graduate student’s stipend or fellowship to be deposited into an individual retirement account .
- The Adoption Tax Credit Refundability Act is another bipartisan bill. The measure generally would enhance the adoption tax credit.
- Another bipartisan proposal would treat bicycle sharing systems as mass transit facilities for purposes of qualified transportation fringe benefits.
Additionally, a group of House Democrats and Republicans wrote to Treasury Secretary Steven Mnuchin in June. The bipartisan group of lawmakers asked Mnuchin to preserve the state and local sales tax deduction in any tax reform plan.
With hopes of retroactively implementing tax reform changes to the beginning of 2017, Congress will have to move swiftly on whatever changes they ultimately make to the tax code. If you have any questions about tax reform, please contact our office 417-881-0145.