We will have to wait another day to see a full release of the tax reform bill currently being debated in Washington, D.C. Late Tuesday night, Representative Kevin Brady, the chairman of the House Ways and Means Committee announced, “In consultation with President Trump and our leadership team, we have decided to release the bill text on Thursday. We are pleased with the progress we are making and we remain on schedule to take action and approve a bill at our committee beginning next week.”
President Trump agreed with Brady's statement, Tweeting, “The Republican House members are working hard (and late) toward the Massive Tax Cuts that they know you deserve. These will be biggest ever!”
There are some key issues still being debated, including deductions for state and local taxes on their federal returns for individuals in New York, New Jersey, and California, individual tax brackets, contributions to 401k retirement accounts, and the Estate Tax.
The House Ways and Means Committee has not made a decision on the Estate Tax, which President Trump has said he wants to repeal immediately. The committee did not decide if it would repeal the Estate Tax or wait a few years and repeal it at another time.
NAED and many other associations would like to see a full repeal of the Estate Tax. The Estate Tax says individuals can inherit up to $5.45 million in assets without being taxed, but everything over that amount is taxed at a 40% rate. When family-owned businesses, like electrical distributors, have warehouses filled with inventory, not to mention property and vehicles, it is up to surviving family members to pay the estate tax on everything the business owns. In many cases, the Estate Tax forces families to liquidate assets to pay the tax. The Estate Tax was passed in 2013 as a way to avoid what was called the “fiscal cliff” in December of 2013 as a way to avoid a government shutdown.
Palmer Schoening is the Executive Director of the Family Business Coalition and someone who works very closely with NAED and other associations. While fighting to eliminate the Estate Tax, Schoening has told tED magazine, “The death tax hurts family business owners and farmers seeking to pass to the next generation.”
As for the corporate tax rate, conservative leaders were told at the meeting that the top rate would be immediately reduced from 35% to 20%, despite recent reports suggesting a possible phase-in to 20%.
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