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Comprehensive tax reform is on the move in the U.S. Congress.
On Thursday, November 2, Republican leaders in the U.S. House unveiled a comprehensive tax reform proposal and signaled plans to seek approval in the full House by Thanksgiving. Senate Republicans also are crafting a bill, which they aim to move to the floor by early December. Congressional Republicans and President Trump are vowing to complete tax reform by Christmas.
The package released by the House addresses four top IPC priorities. The bill would:
- Permanently reduce the corporate tax rate to 20%;
- Allow for immediate 100% expensing of new equipment through January 1, 2023;
- Preserve the R&D tax credit; and
- Reduce the top pass-through rate to 25%, but with new rules designed to prevent abuse by high-earning individuals who form themselves into corporations to get a tax cut.
Other provisions that could be of interest to IPC members include:
- Business interest expense would be allowed for businesses with average gross receipts of $25 million or less;
- The repatriation tax on earnings and profits comprising cash or cash equivalents would be 12%, higher than originally proposed, while remaining earnings and profits would be taxed at 5%;
- The estate tax exemption would be doubled at first, and then the tax would be repealed after six years; and
- The state and local tax (SALT) deduction would be eliminated except for property taxes (up to $10,000).
House committee action is scheduled to begin on Monday, November 6. The “markup” session is likely to last the entire week as members of the House Ways and Means Committee are given a chance to offer amendments that could alter the bill’s language.
IPC remains optimistic in the effort to reform the U.S. tax code, with a goal of making the United States more congenial to the electronics manufacturing ecosystem. We will continue to work with our champions on Capitol Hill to advocate for IPC’s priorities in an effort to have them reflected in the final legislation.