HOUSTON, Sept. 28, 2017 /PRNewswire/ -- Yesterday, the administration and the tax-writing committees released their initial framework for comprehensive tax reform. The document represents the first step in what will be ongoing negotiations between Congress and the administration on how to create a simpler and fairer tax code that benefits U.S. businesses, American workers, the middle-class and the economy at large.
The framework seeks to accomplish this through a series of policy changes designed to encourage growth, support middle-class families, create jobs and level the playing field for small businesses and American workers. The plan also removes incentives to send jobs and capital overseas and broadens the tax base to provide greater fairness for all Americans.
The details of the plan include reductions in individual, business and corporate tax rates as well as the removal of much complexity throughout the tax code. On the individual side, the current seven tax brackets would be collapsed into three brackets of 12 percent, 15 percent and 35 percent. The plan would double the standard deduction to $24,000 for married joint filers and $12,000 for single filers. The framework includes a significant increase in the Child Care Tax Credit for middle-income family tax relief, but a repeal of the exemptions for dependents to simplify filing. The framework further proposes repealing the existing individual AMT.
On the business side, the new maximum tax rate for small and family-owned businesses would be 25 percent. The tax rate for corporations would be set at 20 percent, with the framework providing the opportunity for further tax relief with the elimination of corporate AMT. To pay for the rate reductions, the plan calls for the removal of a number of business credits, incentives and deductions such as the Section 199 domestic production deduction. The plan does however keep the Research and Development (R&D) Tax Credit in place and the credit could potentially be strengthened for domestic manufacturers through recently proposed legislation by Senators Chris Coons (D-DE) and Pat Roberts (R-KS). If implemented into law, the Invent and Manufacture in America Act would phase in an increase to the R&D Tax Credit by up to 25 percent for companies that perform the majority of their manufacturing in the United States.
With respect to international tax, the framework would move to a territorial system of taxation but would allow foreign earnings accumulated overseas to be repatriated, creating a big revenue raiser and generating capital for domestic business investment.
"I commend our policymakers and the administration for looking for solutions that will strengthen U.S. businesses and expand economic opportunities for all Americans," said Dhaval Jadav, alliantgroup CEO. "I'm especially heartened to see that the proposal keeps in place the R&D Tax Credit. We see first-hand here at alliantgroup how much the R&D Tax Credit has been critical for our nation's innovative companies, helping them to create jobs, grow their businesses and strengthen our economy."
"This legislation contains a number of commonsense and long overdue reforms to our tax code," said Dean Zerbe, alliantgroup National Managing Director and the former Senior Counsel to the U.S. Senate Finance Committee. "Credit should go out to Chairmen Hatch (R-UT) and Brady (R-TX) as well as the administration for putting together a framework that will have many Americans nodding in agreement."
alliantgroup's mission is one of education and awareness—our consultancy exists to help U.S. businesses and their CPA and tax advisors properly identify and claim all available federal and state tax incentives. To date, our firm has helped more than 12,000 businesses claim more than $6 billion in government-sponsored tax incentives. alliantgroup is headquartered in Houston and has offices in New York, Boston, Chicago, Indianapolis, Orlando, Sacramento, Irvine and Washington, D.C. For more information on our tax consulting services, follow us on LinkedIn, Twitter and Facebook.