The Latest 2017 Tax Reform Proposals
Whisper Down the Lane?
Remember the game in elementary school where your class formed a line and someone started to whisper in their neighbor’s ear, then they whispered it to the next person, and so on?Usually, when you reached the end of the group, the message was much different than what it started out as.
Tax reform proposals can follow that same pattern. An idea will be mentioned, go through the 535 members of Congress and their staff, the President and his advisors, then multiple lobbyists and special-interest groups, before coming out in a form that barely resembles the initial idea.
That being said, recent tax reform ideas were unveiled last week by the President and top Republican leaders. While we expect any final bill to look different that these current proposals, the proposals do have several common factors that are worth mentioning:
- Reduction in the number of personal income tax brackets from seven to three
- Reduction in the top personal income tax rate from 39.6% to 35%
- Reduction of the corporate income tax rate to 20%
- Reduction of the top income tax rate charged to flow-through entities (partnerships, S corporations, etc.) from 39.6% to 25%
- Elimination of the Alternative Minimum Tax (AMT) for both individuals and corporations
- Increase (of almost double) in the standard deduction allowed on personal income tax returns
- Elimination of the personal exemptions allowed on personal income tax returns
- Preservation of itemized deductions for mortgage interest, charitable contributions, and retirement savings
- Preservation of tax credits related to work and higher education
- Increase in the Child Tax Credit
- Elimination of the Estate and Gift taxes
- Allowance for expensing of capital investments by businesses
- Limitation of the amount of interest that can be deducted by corporations
- Elimination of certain business deductions
- Preservation of the Research & Development and Low Income Housing tax credits
- Elimination of the 35% tax on U.S. companies that repatriate foreign profits
- Imposition of a new minimum foreign tax to protect against income-shifting to foreign countries
GunnChamberlain, P.L. will closely monitor these tax reform proposals as they continue to develop. If you have any questions on such reforms and how they may affect you or your business, please contact our office to schedule a consultation.