Last month, the Administration and Republican congressional leaders released their Unified Framework for Fixing Our Broken Tax Code. The document is a broad tax reform outline intended to serve as a template for the tax-writing committees to develop tax reform legislation. The Administration and congressional leaders propose to retain the Low Income Housing Tax Credit, saying that “the framework explicitly preserves business credits in two areas where tax incentives have proven to be effective in promoting policy goals important in the American economy: research and development (R&D) and low-income housing.”
The Framework does not speak to municipal bonds; however, National Council of State Housing Agencies (NCSHA) reports that a White House spokesperson said that the authors of the Framework intend to protect them.
The Framework was developed over the last several months by the “Big Six”—National Economic Council Director Gary Cohn, Treasury Secretary Steven Mnuchin, Senate Majority Leader Mitch McConnell (R-KY), Senate Finance Committee Chairman Orrin Hatch (R-UT), House Speaker Paul Ryan (R-WI), and House Ways and Means Committee Chairman Kevin Brady (R-TX).
Specific proposed reforms Framework include:
- Reducing the corporate tax rate to 20 percent from its current level of 35 percent;
- Eliminating the Alternative Minimum Tax for both individuals and corporations;
- Allowing businesses to immediately expense for at least five years the cost of new investments in depreciable assets other than structures;
- Partially limiting the net interest expense incurred by C corporations;
- Establishing a tax rate of no more than 25 percent for sole proprietorships, partnerships, and S corporations;
- Establishing a territorial taxation system for global American companies;
- Consolidating the current seven individual tax brackets into three brackets of 12 percent, 25 percent, and 35 percent; and
- Roughly doubling the standard deduction.
To read more, visit the NCSHA website.