The Trump administration and congressional leaders today released a joint framework for tax reform. The fruit of extensive negotiations, the framework will provide guidance to the tax committees of Congress as they prepare legislation intended to advance the tax reform agenda. The framework provided limited details, relying more on high-level guidance to the committees — with exhaustive negotiations expected to continue.
American Bankers Association President and CEO Rob Nichols applauded Congress and the administration for their step forward. “We are encouraged by their commitment to this critically important issue by lowering rates and broadening the tax base, and look forward to seeing a more detailed plan as the legislative process begins,” he said. “ABA and the nation’s $17 trillion banking industry support comprehensive tax reform, and will work with Congress to enact a final plan that grows the economy, creates jobs and reflects our core principles.”
For businesses, the framework lowers the corporate rate to 20 percent, with a 25 percent rate for pass-through businesses. It allows expensing of depreciable assets other than structures for at least five years, a partial limitation — with no detail provided — on the deductibility of net interest expense for C corporations, protection of the R&D and low-income housing tax credits and a move to a territorial international taxation system, including a one-time deemed repatriation of previously untaxed earnings.
For individual taxpayers, the number of brackets is reduced from seven to three (12 percent, 25 percent, 35 percent), with a possible additional top rate. The framework doubles the standard deduction, eliminates exemptions, expands child credits, repeals alternative minimum tax, eliminates most deductions except for mortgage interest and charitable gifts and repeals the estate tax.
ABA is reviewing the framework closely and stands ready to assist congressional staff in drafting legislation that is in line with our core principles for tax reform. The association is engaging in a wide variety of public efforts to ensure tax reform reflects its principles, including sponsorship of a symposium on tax reform in The Hill this week. For more information, contact ABA’s John Kinsella or Curtis Dubay.