November 17, 2017

Tax reform bill approved in House

Tax reform

On November 16, the US House of Representatives approved HR 1, a bill which will overhaul the US tax code, by a vote of 227-205.

The bill proposes a $1.5 trillion dollar tax cut for business and individuals throughout the country.

a cut in the corporate tax rate from 35 percent to 20 percent was proposed by the legislation. The deduction would be a permanent one without any particularly set expiration date. Furthermore, companies would also be allowed to deduct the cost of new machinery and equipment for five years and will also incentivize bring assets currently being stored in low-tax countries back to the US. If companies agree to return these assets to the US, they would be taxed at a rate of 12 percent.

Notably, companies would now be taxed predominantly only for the income they make within the US, rather than tax corporations for their income from all over the world. If the bill becomes law, this will be the largest single cut to the business tax rate in American history.

The bill also plans to eliminate the estate tax by 2024. The estate tax is a tax applied at the time of an individuals death and currently only applies to estates that have a fair market value over $4.49 million. Under the current tax codes, these estates would be taxed at a rate of 40 percent.

The bill will now go to the Senate for a vote before President Donald Trump has to opportunity to sign the bill into law.

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