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House GOP rolls out its tax reform proposal for review


WASHINGTON, D.C. — The Republican tax overhaul plan released on Nov. 2 lays the groundwork for a repeal of the estate tax, enhances Section 179 expensing and pares the number of individual tax brackets.

In addition, the measure would reduce the corporate income tax rate and maintain Section 1031 like-kind exchanges for real property such as land and structures. It would also raise the standard deduction for individuals and married couples.

The Tax Cuts and Jobs Act (House Resolution 1) was sponsored by U.S. Rep. Kevin Brady (R-Texas), chair of the House Ways and Means Committee. Revisions to the bill are possible as early as this week. The measure was scheduled for markup – when amendments may be submitted – by the committee on Nov. 6.

“(The bill) will deliver real tax relief to Americans across the country – especially low- and middle-income Americans who have been struggling for far too long to earn a raise and get ahead,” he said. “Our legislation also delivers unprecedented simplicity that will make it easier and more affordable for families across the country to file their taxes each April.”

The bill calls for the elimination of the estate tax in six years. In the meantime, it doubles the amount of estate property exempt from the tax. The current exemption rates are $5.49 million per person and $10.98 million per couple.

The deduction limit for small businesses under Section 179 of the federal tax code would increase from $500,000 to $5 million. Section 179 refers to the deduction of business expenses for investments such as property and small equipment. The provision is temporary and would end in five years.

Under the bill, the corporate income tax rate would fall from 35 to 20 percent. The number of individual tax brackets would drop from seven to five – zero, 12 percent, 25 percent, 35 percent and 39.6 percent.

For example, a married couple making up to $90,000 would fall in the 12 percent bracket; currently the couple would pay 15 percent. An individual making up to $12,000 wouldn’t pay any taxes; the current rate is 10 percent.

Standard deductions would increase to $12,000 for single individuals, up from $6,350. The deduction for married couples would go up from $12,700 to $24,000.

Sen. Elizabeth Warren (D-Mass.) said the biggest beneficiaries of the tax plan are giant banks, multinational corporations and wealthy foreign investors. “So here we are at a moment of record corporate profits, and the Republicans think what this economy needs is a bunch of tax giveaways to the very richest in this economy – to the giant corporations,” she said.

The American Farm Bureau Federation said the country is long overdue for a tax code that recognizes the unique financial challenges of farmers and ranchers.

“(The) proposal includes expanded, immediate expensing while continuing the business interest deduction important to so many farmers and ranchers,” said Zippy Duvall, the organization’s president. “It also provides immediate relief from the estate tax, with a repeal to follow in subsequent years.

“We will be studying the plan to ensure the new rate structure reduces the tax burden of our nation’s farmers and ranchers and gives them the flexibility they need to reinvest in their businesses.”

The National Farmers Union (NFU) supports efforts to simplify the tax code, but is opposed to elements of the plan because they shift the tax burden from the nation’s top earners to family farmers, ranchers and the middle class, said Roger Johnson, NFU president.

“While we await details on specific provisions for farming operations, NFU urges a shift toward simplified, progressive tax policy that recognizes the unique needs of family farming and ranching operations,” he added. “This includes maintaining the estate tax and provisions like cash accounting, stepped-up basis, interest expensing and others that are important to sustaining a family farm in the 21st century.”

The National Biodiesel Board (NBB) said it was disappointed the plan didn’t include an extension of biodiesel tax incentives.

“For decades, stable federal tax incentives for oil and gas have contributed to the world-class, conventional energy industry of today, and NBB encourages legislators to create a similarly stable tax framework for biodiesel and renewable diesel,” said Doug Whitehead, the board’s chief operating officer.

11/8/2017