Tax Reform Legislation Unveiled
Last week, House Republican leaders unveiled a draft of sweeping tax reform legislation — the first major overhaul of the tax code in more than three decades. Today, the House Ways and Means Committee is expected to begin a multi-day markup of this landmark legislation. Some of the major provisions of the bill include:
- A corporate income tax rate for C-corporations of 20 percent
- An income tax rate of 25 percent for passive income from “pass-through” entities, including Subchapter S banks (with potential restrictions on the ability of active shareholders to claim the lower corporate rate)
- Restrictions on net interest deductibility, with businesses whose average gross receipts exceed $25 million prohibited from deducting net interest expense exceeding 30 percent of adjusted taxable income
- Retained homeownership provisions but subject to new caps going forward
- Eliminating the deduction for deposit insurance premiums for banks with over $50 billion in assets and phasing in the elimination for banks with $10-50 billion in assets
- Broadening the tax base by eliminating new markets and historic tax credits and net operating loss carrybacks
Unfortunately, there was no reform to the credit unions’ or farm credit system’s tax-exempt status. The American Bankers Association has prepared an initial analysis of the bill, which can be reviewed here.
The CBA’s federal government relations committee will be reviewing the legislation in the near future, to determine an official position on the measure.