Following passage of the Republican-crafted 2018 budget resolution, Congress quickly turned its attention to the similarly-crafted tax reform proposal known as the “Tax Cuts and Jobs Act”. The U.S. House has already passed its version of tax reform, and now attention has shifted to the Senate, which has indicated it will begin debating the proposal on the floor after Thanksgiving break.
In its current form, the legislation includes many components that would be beneficial to PFMA members, even while maintaining certain tax allowances, such as the interest expense deduction and the advertising deduction. The estate, or “death” tax, which has long been despised for forcing family-owned businesses and farms without sufficient funds to pay the tax to liquidate assets in order to comply, would be repealed under the proposal as well.
Pass-through businesses would see a reduction in their maximum tax rate from 39.6% to 25% on the first 30% of business income, and the corporate maximum tax rate would also be reduced from 35% to 25%. Additionally, businesses would be able to claim new investments for the next five years, providing for growth in many segments of the economy.
Although PFMA supports the tax rate reductions on both business groups as a driver of economic growth, we remain concerned that the proposal does not go far enough in pursuing full rate parity between pass-through businesses and “c-corps.”
It is worth noting that the fate of tax reform is in no way finalized, and there are likely to be changes made to the legislation as the process moves forward. Members are encouraged to reach out to their U.S. Congressmen and women, and ask that they support a level playing field for businesses through rate parity, without offsetting those cuts through the reduction or elimination of business tax incentives. Your voice is vital in helping educate legislators on the real-world impact tax reforms would have on PFMA members like you, and we thank you for your advocacy on behalf of your business and industry.
Members should also feel free to contact Alex Baloga or Meagan Thorpe for additional information, including a copy of the bill summary or an in-depth analysis of the proposal.
In its current form, the legislation includes many components that would be beneficial to PFMA members, even while maintaining certain tax allowances, such as the interest expense deduction and the advertising deduction. The estate, or “death” tax, which has long been despised for forcing family-owned businesses and farms without sufficient funds to pay the tax to liquidate assets in order to comply, would be repealed under the proposal as well.
Pass-through businesses would see a reduction in their maximum tax rate from 39.6% to 25% on the first 30% of business income, and the corporate maximum tax rate would also be reduced from 35% to 25%. Additionally, businesses would be able to claim new investments for the next five years, providing for growth in many segments of the economy.
Although PFMA supports the tax rate reductions on both business groups as a driver of economic growth, we remain concerned that the proposal does not go far enough in pursuing full rate parity between pass-through businesses and “c-corps.”
It is worth noting that the fate of tax reform is in no way finalized, and there are likely to be changes made to the legislation as the process moves forward. Members are encouraged to reach out to their U.S. Congressmen and women, and ask that they support a level playing field for businesses through rate parity, without offsetting those cuts through the reduction or elimination of business tax incentives. Your voice is vital in helping educate legislators on the real-world impact tax reforms would have on PFMA members like you, and we thank you for your advocacy on behalf of your business and industry.
Members should also feel free to contact Alex Baloga or Meagan Thorpe for additional information, including a copy of the bill summary or an in-depth analysis of the proposal.
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