Here Is The Full Text And Summary Of The Amended House GOP Tax Bill

Tyler Durden's picture

While we await the full details of the Senate bill, moments ago the House Ways and Means Committee released the Amended House GOP tax bill, as well as its summary.

Here are the key highlights from the Amendment (link), first in principle:

Amendment to the Amendment in the Nature of a Substitute to H.R. 1 Offered by Mr. Brady of Texas The amendment makes improvements to the amendment in the nature of a substitute relating to the maximum rate on business income of individuals, preserves the adoption tax credit, improves the program integrity of the Child Tax Credit, improves the consolidation of education savings rules, preserves the above-the-line deduction for moving expenses of a member of the Armed Forces on active duty, preserves the current law effective tax rates on C corporation dividends subject to the dividends received deduction, improves the bill’s interest expense rules with respect to accrued interest on floor plan financing indebtedness, modifies the treatment of S corporation conversions into C corporations, modifies the tax treatment of research and experimentation expenditures, modifies the treatment of expenses in contingent fee cases, modifies the computation of life insurance tax reserves, modifies the treatment of qualified equity grants, preserves the current law treatment of nonqualified deferred  compensation, modifies the transition rules on the treatment of deferred foreign income, improves the excise tax on investment income of private colleges and universities, and modifies rules with respect to political statements made by certain tax-exempt entities.

And the details, from the summary (link):

  • Maximum rate on business income of individuals (reduced rate for small businesses with net active business income)

The amendment provides a 9-percent tax rate, in lieu of the ordinary 12-percent tax rate, for the first $75,000 in net business taxable income of an active owner or shareholder earning less than $150,000 in taxable income through a pass-through business. As taxable income exceeds $150,000, the benefit of the 9-percent rate relative to the 12-percent rate is reduced, and it is fully  phased out at $225,000. Businesses of all types are eligible for the preferential 9-percent rate, and such rate applies to all business income up to the $75,000 level. The 9-percent rate is phased in over five taxable years, such that the rate for 2018 and 2019 is 11 percent, the rate for 2020 and 2021 is 10 percent, and the rate for 2022 and thereafter is 9 percent. For unmarried individuals, the $75,000 and $150,000 amounts are $37,500 and $75,000, and for heads of household, those amounts are $56,250 and $112,500.

  • Maximum rate on business income of individuals (eliminate provisions related to Self-Employment Contributions Act)

The amendment preserves the current-law rules on the application of payroll taxes to amounts received through a pass-through entity.

  • Repeal of nonrefundable credits

The amendment preserves the current law non-refundable credit for qualified adoption expenses.

  • Refundable credit program integrity

The amendment requires a taxpayer to provide an SSN for the child in order to claim the entire amount of the enhanced child tax credit.

  • Rollovers between qualified tuition programs and qualified able programs

The amendment would allow rollovers from section 529 plans to ABLE programs.

  • Repeal of exclusion for qualified moving expense reimbursement

The amendment preserves the current law tax treatment for moving expenses in the case of a member of the Armed Forces of the United States on active duty who moves pursuant to a military order.

  • Reduction in corporate tax rate

The amendment lowers the 80-percent dividends received deduction to 65 percent and the 70- percent dividends received deduction to 50 percent, preserving the current law effective tax rates on income from such dividends.

  • Interest

The amendment provides an exclusion from the limitation on deductibility of net business interest for taxpayers that paid or accrued interest on “floor plan financing indebtedness.” Full expensing would no longer be allowed for any trade or business that has floor plan financing indebtedness.

  • Modify treatment of S corporation conversions into C corporations

The amendment provides that distributions from an eligible terminated S corporation would be treated as paid from its accumulated adjustments account and from its earnings and profits on a pro-rata basis. The amendment provides that any section 481(a) adjustment would be taken into account ratably over a 6-year period. For this purpose, an eligible terminated S corporation means any C corporation which (i) was an S corporation on the date before the enactment date, (ii) revoked its S corporation election during the 2-year period beginning on the enactment date, and (iii) had the same owners on the enactment date and on the revocation date.

  • Amortization of Research and Experimentation Expenditures

The amendment provides that certain research or experimental expenditures are required to be capitalized and amortized over a 5-year period (15 years in the case of expenditures attributable to research conducted outside the United States). The amendment provides that this rule applies to research or experimental expenditures paid or incurred during taxable years beginning after 2023.

  • Uniform treatment of expenses in contingent fee cases

The amendment disallows an immediate deduction for litigation costs advanced by an attorney to a client in contingent-fee litigation until the contingency is resolved, thus creating parity throughout the United States as to when, if ever, such expenses are deductible in such litigation. Under current law, certain attorneys within the Ninth Circuit who work on a contingency basis can immediately deduct expenses that ordinarily would be considered fees paid on behalf of clients, in the form of loans to those clients, and therefore not deductible when paid or incurred. This provision creates parity on this issue throughout the United States by essentially repealing the Ninth Circuit case, Boccardo v. Commissioner, 56 F.3d 1016 (9th Cir. 1995), which created a circuit split on this issue.

  • Surtax on life insurance company taxable income

The amendment generally preserves current law tax treatment of insurance company deferred acquisition costs, life insurance company reserves, and pro-ration, and imposes an 8% surtax on life insurance income. This provision is intended as a placeholder.

  • Nonqualified deferred compensation

The amendment strikes Section 3801 so that the current-law tax treatment of nonqualified deferred compensation is preserved.

  • Modification of treatment of qualified equity grants

The amendment clarifies that restricted stock units (RSU) are not eligible for section 83(b) elections. Other than new section 83(i), section 83 does not apply to RSUs.

  • Treatment of deferred foreign income upon transition to participation exemption system of taxation

The amendment provides for effective tax rates on deemed repatriated earnings of 7% on earnings held in illiquid assets and 14% on earnings held in liquid assets.

  • Excise tax on certain payments from domestic corporations to related

foreign corporations; election to treat such payments as effectively connected income. The amendment modifies the bill’s international base erosion rules in two respects. First, the provision eliminates the mark-up on deemed expenses. Second, the amendment expands the foreign tax credit to apply to 80% of foreign taxes and refines the measurement of foreign taxes paid by reference to section 906 of current law rather than a formula based on financial accounting information.

  • Excise taxed based on investment income of private colleges and universities

The amendment ensures that endowment assets of a private university that are formally held by organizations related to the university, and not merely those that are directly held by the university, are subject to the 1.4-percent excise tax on net investment income.

The full bill is below (link):

 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Iconoclast's picture

Summary, in a couple of paragraphs please? Tia.

Daves Not Here's picture

"You are enslaved by debt.

Stop resisting."

FreeShitter's picture

The beatings will continue until morale improves........

ukspreads's picture

Yep, and the moon could crash into the USA this evening and the Dow would still end up positive

 

JRobby's picture

Moon? Oh that.

Trump left the country so these clowns could blow their feet off. Looks like it might be working.

Cash2Riches's picture

We are already collectively long past the point of no return. The best they can hope for now is a slow down of that collapse, unfortunately, I don't think they even want that.

 

https://goldsilverliberty.blogspot.ca/2017/11/dr-ron-paul-we-are-approac...

TAALR Swift's picture

ZH, just publish the LUT, with 'No Comment'.

(LUT = Look-Up Table, in case you don't understand EE or IT-speak.  Two columns.  Showing Income level v. Tax level)

Ignatius's picture

I note that "our" tax system still doesn't fit on a postcard.  Sad.

Erek's picture

The postcard taxform would only consist of the following two lines:

 

How much did you earn last year?

Send it in.

ParkAveFlasher's picture

Thanks, ZH!  Some light reading for lunch. 

syzygysus's picture

blah blah blah

 

more complications on the 79,000 page tax code.

dump it all.

GotAFriendInBen's picture

1. Bend over

2. Grab ankles

idontcare's picture

What happened to that one page simplified return we were all promised during the campaign?

MozartIII's picture

You'll be asking that for years.

autofixer's picture

You didn't actually believe that did you? 

GotAFriendInBen's picture

How many unpaid interns were orally gratified by the bill's sponsors before typing this up?

now please excuse me while I go back to BTFD

aliens is here's picture

GOP is fucked. No wonder they want anyone but Trump. They want to lose so they can always tell you we need the WH to do anything. LOL a bunch of no good money sucking leeches.

Consuelo's picture

 

 

- Accounting firms of all sizes and permutations

- The educational establishment

- The legal profession

- And nearly everything else... 

 

All bound and benefitted by an ever-expanding and infinitely complicated tax code.

 

Which is why - short of a currency crisis and subsequent socio-economic collapse, the U.S. tax code will never be simplified. 

 

 

small axe's picture

the first step in tax reform must be to burn the existing code along with IRS headquarters (just to be sure to stamp out the contagion)

jughead's picture

burn, baby, burn, let the muthafucker burn

Mike Masr's picture

Fuck John McCain. I hope he burns in Hell!

TAALR Swift's picture

Hell.  Is that between Tuscon AZ and the Border?

hooligan2009's picture

"this is not the tax bill you are looking for"

epic fail

.. just what are these fuckwits paid to do?

jughead's picture

All these fuckheads know how to do is to further overcomplicate what should be a simple system.  Do they really think we don't know that the overcomplication comes from each and every one of them trying to satisfy their multiple financial patrons?