Daily Tax Update - November 2, 2017: Ways and Means Committee Releases Text of Tax Reform Bill

Ways and Means Committee Releases Text of Tax Reform Bill:  Today, the House Ways and Means Committee released the Tax Cuts and Jobs Act to overhaul major aspects of the United States tax system. Originally scheduled for release on Wednesday, November 1, Ways and Means Committee Chairman Kevin Brady (R-TX) postponed the bill’s unveiling by one day, largely in order to negotiate with Republicans from high-tax states who threatened to oppose the bill due to language that would eliminate the federal deduction for state and local taxes (SALT). In the bill released today, the deduction for state and local taxes is eliminated, with a limited exception for state and local property taxes up to $10,000.

The bill would cut the corporate tax rate to 20 percent. It also would apply a 25 percent rate to business income earned by owners and shareholders of certain pass-through entities.  The bill would also adopt a territorial system of international taxation, with an immediate tax on existing retained offshore earnings, a new tax on foreign subsidiary high returns, and a new tax certain payments from US companies to related foreign companies. These later provisions are intended to prevent base erosion and income shifting as a result of the shift to a territorial system. 

The bill is widely seen as the beginning of an ongoing negotiation. Chairman Brady indicated that he plans to release a chairman’s mark as soon as tomorrow that incorporates feedback from members. The bill is scheduled for committee markup on Monday, November 6. In addition, the Senate Finance Committee is working on its own tax reform plan.

For further information, click here for Steptoe's further analysis.