WASHINGTON – Senate Republicans Will Unveil Their Version Of A Draft Of Corporate tax reduction law that President Trump has described as essential for a tax rewriting is more in line with the middle class than a rival project that runs through the House.
The bill introduced in the Senate Finance Committee restores many of the breaks that were eliminated in the House bill, which passed the Ways and Means Committee on Thursday afternoon.
These include the mortgage debt deduction that the House proposed to cap at $ 500,000. tax breaks for the elderly and the blind and high medical costs for patients. The Senate bill also allows graduate students to retain a valuable deduction and retain a tax credit for adoptive parents, which was eliminated by the House, but was added in a House amendment. committee Thursday afternoon
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disparate bills show the competing political pressures facing Republican lawmakers and Senate calculations. Leaders in the House ensure that bills are passed by their respective chambers. Although both bills share similar corporate and personal tax reduction priorities, they differ on issues of high political sensitivity, particularly for vulnerable Republican members of high-tax states
]. tax deduction, with the Senate completely eliminating valuable tax relief. The House bill adjusts it, but would still allow individuals to deduct property taxes up to $ 10,000. The Republicans of New York and New Jersey have already rejected this restriction as being too strict and the complete elimination of the Senate could frighten some members of the House, who will have little power to change the final product once the bill is passed. Another sore point is the Senate's Senate plan to reduce corporate rates from 35% to 20% but delay implementation until 2019. Such a move would help Republicans stay within the bounds of the bill . and lawmakers were relying on to avoid adding to the federal deficit.
The Senate bill maintains a lower tax bracket of 10 percent for individuals – the House bill brought it to 12 percent – and, as the bill would almost double the standard deduction for individual filers. The Senate version includes seven income brackets, scooping the simplicity that the House editors used to sell their bills, reducing the number of parentheses to four.
High salaries would pay a higher rate of 38.5% in the Senate's plan, down from 39.6% today, a rate that has been maintained in the draft. House law.
In the meantime, the Senate would not create a lower special rate for the bill. called Relay Entities, which are businesses whose profits are distributed to their owners and taxed as individual income. Instead, the Senate would create a deduction for homeowners of all income levels, lowering taxes on wealthy owners and owners of small, middle-class businesses that would not have benefited from the lower passback rate. from the room.
Senate staff members said the bill would achieve the Republicans' goal of not losing more than $ 1.5 trillion in tax revenue over a decade . But they suggested that the Finance Committee should make changes in order to ensure that it does not lose its income after 10 years and that it thus complies with the rules of procedure that would allow the project to Law to pass a joint vote
These changes could include the establishment of certain tax cuts to expire after a certain number of years.
The details emerged as Republican senators planned to publish their long-awaited bill. On Thursday, in the midst of Republican MPs, small businesses and other industry groups, Representative Kevin Brady, who chairs the Ways and Means Committee, unveiled on Thursday a 29-page amendment to other revisions to the plan. Taxation of the House. The amendment restores the tax credit for adoption, which the tax system of the House had planned to repeal. It also creates a new lower tax rate for some small business owners, a measure that small groups of marketers advocated.
Under the new provision, the first $ 37,500 of business income would be taxed at 9%. rather than 12 per cent, for a single person earning less than $ 75,000 through a transmission company. For a married couple, dollar amounts would be doubled
The Senate also includes a provision to prevent large multinational corporations from hiding profits abroad. The bill will introduce a new business tax on US and foreign companies – in fact, a minimum tax on their US-earned income – while levying a 12.5% tax on the income that US companies receive at home. Foreign ownership of their intellectual property.
The minimum tax included in the Senate bill is an essential component of the Republicans' plans to revise the way the tax code treats corporations, using both carrots and The sticks. The plan will encourage domestic investment by lowering the corporate tax rate from 35% to 20% and will discourage companies from transferring money abroad by imposing the new tax. However, it remains to be seen whether the plan will have the desired effect: The Senate is expected to delay corporate tax cuts until 2019, according to a Republican Senator and a lobbyist familiar with the plan that has required anonymity to discuss a plan that has not yet been released.
The Republicans of the finance committee met with staff for weeks to draft the Senate bill. Democrats criticized their process even before the bill was released on Thursday.
"No Democrat has participated in this bill," said Senate minority leader Chuck Schumer of New York. "It was built behind closed doors by the majority party, which does not intend to negotiate with the Democrats because they have locked themselves into a partisan process that only necessitates". a majority vote and they will try to rush him into this room with imprudent speed. "
Senate plan to impose a tax on US and foreign companies transferring money earned in the United States abroad, but will do it in a simpler way than a complex plan described in the House version, the assistants said. "It levels the playing field" between competing national and multinational companies in the same markets, said a committee assistant.
Preliminary estimates indicate that he would reap more than $ 130 billion in tax revenue over 10 years. Committee have The initial approach of the House, which would have imposed a 20% "excise tax" on payments between US and foreign affiliates, would have generated revenue estimated at $ 155 billion. .
impose a minimal tax, in a way, on profits made in the United States by multinationals.
Under the current law, companies can avoid the imposition of these profits by transferring them to affiliates abroad, in countries where income tax rates is lower than it is in the United States. For example, the US subsidiary of a country based in Ireland, where the corporate tax rate is well below the US rate, could make payments to the Irish company for the use of its property intellectual. These payments would be deducted from the US subsidiary's profits for tax purposes in the United States.
The new approach would apply only to large multinationals that make a significant amount of payments to foreign affiliates. It would impose a 10 percent tax on the difference between the actual tax debt of a corporation and the liability it would have incurred for the profits that it would have transferred abroad.
So, for example, if a company makes 100 million US dollars. profits, but paid $ 80 million to a foreign affiliate for intellectual property rights, it would start with a tax of $ 4 million. (This amounts to paying the proposed corporate tax rate of 20%, out of an overall profit of $ 20 million.) It would then face an additional tax of $ 4 million on the profits that it would make. he has transferred abroad. Payments of $ 80 million would be subject to a rate of 10%, which equals $ 8 million, subtract the $ 4 already paid and you get the additional $ 4 million.)
The House watered down its excise tax proposal this week after it was attacked by a host of business and conservative groups, including the American Forest and Paper Association and Americans. for Prosperity, an arm of Koch's political network.
In the House, Republicans were still struggling with a critical math problem Thursday on a major revenue hole to fill. To avoid a democratic filibuster, tax legislation can not add more than $ 1.5 trillion to the federal budget deficit over a decade, and the bill seemed to exceed that limit because it reduced federal revenues by about $ 1.57 billion over a decade. Earlier this week, the Joint Committee on Taxation
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