Ways and Means Releases Tax Reform Proposal
House Ways and Means Committee Republicans unveiled a tax reform legislative draft 2 November that proposes cuts to tax rates for corporations, passthrough entities, and individuals. The reform also calls for a shift to a territorial system for taxing foreign-source income of U.S. multinationals.
The Ways and Means proposal, formally known as the Tax Cuts and Jobs Act (“TCJA”), includes specific details on how the tax relief provisions would operate. Moreover, it lays out the policy tradeoffs that will be necessary to pay for the tax relief provisions which, according to various estimates, could cost several trillion dollars over 10 years.
Among the provisions that remain subject to further analysis is the so-called repatriation rate that will mandate a one-time tax on overseas assets for U.S. companies. Illiquid assets would be taxed at a 5% rate, spread out over a longer period than liquid assets like cash which would be taxed at a 12% rate.
Ways and Means Committee Chairman Kevin Brady (R) has indicated that his panel remains on track to take up the TCJA and consider possible amendments beginning on 6 November—a process that he expects to last for several days.
Brady anticipates a static revenue estimate from the Congressional Budget Office and the Joint Committee on Taxation before the mark-up or as it begins, and a dynamic score—reflecting macroeconomic feedback from the proposed reforms—after the bill is approved by Ways and Means. He currently expects that the measure will receive a vote on the House floor during the week of 13 November.
We will continue to monitor these developments and will apprise our clients accordingly.
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