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Here is your daily round-up of news and analysis to keep you informed as tax reform works its way through Congress.
In the news
Wall Street Journal: “House Passes GOP Bill to Overhaul Tax System”
The House of Representatives passed a bill that would usher in the most far-reaching overhaul of the U.S. tax system in 31 years, backing a plan that would lower the corporate tax rate to its lowest point since 1939 and cut individual taxes for most households in 2018.
The bill would repeal the alternative minimum tax, increase the child tax credit, abolish the estate tax by 2025 and transform the U.S. system for taxing multinational corporations. The House plan would raise taxes on some people by removing personal exemptions and deductions for state and local income taxes, medical expenses and student loan interest. On the whole, the bill would reduce federal taxes by $1.4 trillion over the next decade.
The 227-205 vote was a victory for Speaker Paul Ryan (R., Wis.) and President Donald Trump, who rallied Republicans before the vote. Republicans want to finish the new tax law before the year ends, and they are banking on it as an economic boon and the key to their political futures.
Forbes. Ryan Ellis: “Top Five Ways the Senate Tax Reform Bill Cuts Taxes for Middle Class Families”
The Senate Finance Committee this week will report out a tax reform bill that cuts taxes for the middle class. The committee estimates that a typical middle class family of four will see an annual tax cut of $1500.
Below are the top five ways the bill reduces taxes for working families.
The Hill. Bernie Marcus: “Tax bills give small businesses plenty to be thankful for”
Small-business owners have a lot to be thankful for next week.
The recently introduced tax-reform bills in the House of Representatives and Senate make small-business tax cuts a centerpiece. This long overdue relief would finally address the overtaxation that most small business owners say is the biggest hurdle they face.
At the moment, small businesses, the vast majority of which pay tax at individual rates, face a marginal federal tax burden of 39.6 percent. When state and local taxes are factored in, this figure can rise to 50 percent. This puts small businesses at a competitive disadvantage with their big business and international competitors, whose tax burdens are much lower.
Partially as a result of years of overtaxation, American small businesses — like the communities where they locate — have not recovered from the Great Recession. New business formation remains at historic lows. Boarded-up shops dot Main Streets throughout the country. I believe that if The Home Depot started today, overtaxation would have prevented it from achieving its current success.
Proposed tax cuts can change this by allowing small businesses to keep a little more of their earnings necessary to survive and thrive in today’s competitive business environment.