Trump and the 'big six' kick off US tax reform legislation
The framework's goals are to simplify the tax code, raise paychecks, create jobs, and repatriate funds locked offshore by deferral.
High level details on the tax code are as follows:
Individuals: The changes to the tax code for individuals include repeal of the alternative minimum tax, the estate tax, and the generation skipping tax. It also provides a 25% rate for business income of small and family-owned sole proprietorships, partnerships and S corporations. One theme in the framework is that the complex details are left to Congress – for the 25% rate.
Corporations: The corporate rate is set at 20%, and the corporate alternative minimum tax is repealed too. Starting today, September 27, 2017, business investments in depreciable assets other than structures can be expensed immediately, for at least five years. Interest expense, however, will be partially limited. No further information is given, although a limitation of 30% of EBITDA was thought to be under consideration.
International: The framework provides for a 100% exemption for dividends paid from foreign subsidiaries in which a US parent owns at least a 10% stake. However, accumulated foreign earnings are subject to current taxation at an unspecified rate, paid over a period of years, and with a lower rate for illiquid assets. The tax committees are charged with drafting anti-base erosion rules and rules 'leveling the playing field' between US companies and foreign headquartered companies.
Richard Husseini, Jeff Munk, Mike Bresson, Don Lonczak and Bobby Phillpott, Baker Potts.
Home >Articles > Trump and the 'big six' kick off US tax reform legislation
Trump and the 'big six' kick off US tax reform legislation
The framework's goals are to simplify the tax code, raise paychecks, create jobs, and repatriate funds locked offshore by deferral.
High level details on the tax code are as follows:
Individuals: The changes to the tax code for individuals include repeal of the alternative minimum tax, the estate tax, and the generation skipping tax. It also provides a 25% rate for business income of small and family-owned sole proprietorships, partnerships and S corporations. One theme in the framework is that the complex details are left to Congress – for the 25% rate.
Corporations: The corporate rate is set at 20%, and the corporate alternative minimum tax is repealed too. Starting today, September 27, 2017, business investments in depreciable assets other than structures can be expensed immediately, for at least five years. Interest expense, however, will be partially limited. No further information is given, although a limitation of 30% of EBITDA was thought to be under consideration.
International: The framework provides for a 100% exemption for dividends paid from foreign subsidiaries in which a US parent owns at least a 10% stake. However, accumulated foreign earnings are subject to current taxation at an unspecified rate, paid over a period of years, and with a lower rate for illiquid assets. The tax committees are charged with drafting anti-base erosion rules and rules 'leveling the playing field' between US companies and foreign headquartered companies.
Richard Husseini, Jeff Munk, Mike Bresson, Don Lonczak and Bobby Phillpott, Baker Potts.
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