U.S. Senate Passes Tax Bill; Moves To ‘Conference’ To Negotiate Final Version

by | 12.05.2017 | 8:42am

Senators scrambled Saturday, December 2, to muster the necessary 51 votes to pass its version of the Tax Cuts and Jobs Act of 2017, effectively laying down a marker to jump start negotiations with the House of Representatives on a final package. While details related to the senate bill continue to emerge, please see the below highlights of key provisions that will impact the equine industry. Many of these provisions diverge from the House-passed version and could be subject to changes during the House and Senate conference, which congressional leadership will organize this week:

Business Provisions

* Corporate Tax Rate: The senate bill delays reduction of the corporate tax rate from 35% to 20% until 2019. By contrast, H.R. 1 provides an immediate corporate tax cut, effective in 2018. Lawmakers will have to bridge this gap during the conference committee.

* Small Business: The senate vehicle establishes a 23% deduction for small business income of “pass-thru entities,” or small companies which opt to pay taxes under the individual rate. Senators included this deduction to address concerns from lawmakers who claimed that previous versions of the bill did not create sufficient tax relief for small business.

* Expensing: While the House bill and a previous version of the senate vehicle provided 100% bonus depreciation, the final senate bill appears to modify treatment of bonus depreciation to “phase down … the percentage from 100% by 20% per calendar year.” AHC largely supports the House treatment of expensing, which according to Hill sources, includes a broad legislative definition to allow full expensing of horses.

* Alternative Minimum Tax (AMT) – According to Hill sources, the senate vehicle preserves a 20% corporate, alternative minimum tax. The House bill repeals the unpopular provision altogether, laying the groundwork for a major discussion point during negotiations for a final package.

* Name and Logo Royalties: The senate bill strikes a provision from a previous version of the bill that treated “name and logo royalties” as unrelated business taxable income.

* Wagering Losses: A previous version of the senate bill states that it amends the existing tax code provision that addresses treatment of gambling winnings, without specifying how. The current senate vehicle does not appear to clarify this provision, which AHC will continue to monitor.

Individual Provisions

* Estate Tax: The Senate preserves it commitment to double the estate tax exemption, currently valued at $5.49 million for individuals, without full repeal. By contrast, H.R. 1 eliminates the estate tax within six years of enactment.

* State and Local Taxes (SALT) – Senators agreed to an itemized deduction for up to $10,000 in state and local property taxes, which resembles a compromise included in the House bill.

* Mortgage Interest: The senate version will cap the deduction for mortgage interest indebtedness at $1 million. H.R. 1, however, establishes a $500,000 cap on interest from new home purchases, a provision drawing criticism from the homebuilders.

* Charitable Contributions: In cases of individual cash contributions, the senate bill increases the percentage-limit deduction from the current rate of 50% to 60%.

Heading to the Finish Line

When congressional leaders appoint conferees, who will be recruited from the Senate Finance Committee and the House Ways and Means Committee, serious negotiations will begin, with a goal of presenting a final package to the president for his signature before Christmas. To view a copy of a four-page table outlining highlights related to the various revenue impacts of the bill's key provisions, please click here: http://www.horsecouncil.org/wp-content/uploads/2017/12/Table-Revenue-Impacts.pdf​

  • roseann cherasaro

    A lot of unknowns here most corporations pay about 18% with loopholes so where are the loophole fixes?

    • Larry Ensor

      That’s what we are told, keep hearing. But is it truth or fiction? Can you name, identify those “loop holes”? No snark intended.

      The vast majority of tax payers have no idea of how business and taxes work. They hear that a business “made” X millions in a given year and paid little to no taxes. What most people don’t understand, take into account just because a business took in say $1,000,000 in any given years. It doesn’t mean that was all profit, taxable profit. It may have cost that business $999,000 to “make” that $1,000,000.

      A lot of people are under the misconception when a business a person “writes of” deducts X from their “income” that the IRS sends them a check for that amount. Doesn’t work that way. Wish it did, I have lots of loss carry forwards, lol.

      • Beau Geste

        It’s really too bad that the majority of the public has been misled regarding business.

        • Rue de Jean

          How?

          • Beau Geste

            The tone of your question proves my point better than anything I could say. Business is considered the enemy by a great many people.

          • Rue de Jean

            OMG…hahahahahahahahahaha!

          • Beau Geste

            I’m sorry, but I honestly don’t know what you’re talking about.

          • Michael Castellano

            It often is. The wealthier interests buy and own politicians in both parties. Everyone know this.

          • Beau Geste

            And it often isn’t. Political parties sell their allegiance to the highest bidder. It often isn’t a business.

          • Michael Castellano

            Best example I can think of is oil interests, which is likely the most powerful lobby in our country. What makes you think the current and many previous administrations don’t do it’s bidding? Wouldn’t an appointment of a former Exxon head to Secretary of State suggest this? Along with many of his other moves, like denial of global warming, which only the oil companies deny. Every country in the world believes in global warming. It has been a reality for many years. Except the present government we have. The oil companies know that the writing is on the wall. But they persist because they are still the number one entity that dominates government policy. It will be too late once the oceans rise 10 feet and cover most of the major cities in the world. It may already be too late. Carbon dioxide and methane levels have reached the same levels as the dinosaur age, when there were no polar caps. Over time the oceans will cover most of the coastal areas.

          • Beau Geste

            I mean no disrespect, Michael but we are very clearly at polar opposites in terms of political beliefs and it would be a waste of your time and mine to continue this discussion with no hope of either changing sides. You stated your case respectfully and even though I disagree, I appreciate that. Many of the postings are simply hostile and show a lack of the respect you were able to exhibit in your remarks.

          • Michael Castellano

            Thanks for the thought. We have differences which need to be resolved, for the sake of the entire country. Or we could have another bloody civil war. A war which was never fully resolved to this day, as the last election demonstrated.

      • roseann cherasaro

        I work for a small owner run biz for almost 30 years a mom and pop operation I understand completely how taxes work and this bill has too many unknowns.

        • Larry Ensor

          Fair enough name some of the “unknowns” please. Save me and others the time of trying to and figure things out,

          Again no snark intended but you didn’t answer my first question. Don’t have to list them all give a few credible examples.

      • HowardRoark314

        I had a cousin work for me once. I sold tech gear. He helped me sell a $1500 laptop, and was so sure of himself that his ‘cut’ as a commission was 50% of that, or $750. I had to explain to him that the laptop I sold for $1500 cost me $1200 and he was owed $150. He was clueless, like Michael Castellano above.

        I love my cousin, but when I hired him his first question was ‘how much vacation do I get?’. Lesson learned, never hire family.

        • Michael Castellano

          I would appreciate you direct your insults directly to me. I promise to do likewise.

        • Larry Ensor

          Yup, hiring family and friends doesn’t always work out too well.

  • Michael Castellano

    What a great tax plan. Approval ratings are even lower that you know who’s. The Congress critters that voted for it might even get a chance to read it if they behave.

  • Michael Castellano

    To be more serious, our Country has not seen significant infrastructure development since Eisenhower and FDRs presidencies. Our once mighty steel mills, industrial plants, railroads, and ship building capacity — which allowed us to win WWII — has largely vanished. Most cities contain abandoned ghettos where the generational poor live when they are not being sent to our overflowing jails. The last thing we need to do is expand the deficit to give more money to the upper classes. If you had any doubts that this was a “Make America Last” in the world among the major powers type of plan, this bill should convince you otherwise.

    • HowardRoark314

      You are woefully mis-educated. Par for the course in the US. Only wealthy people pay taxes, the poorest 45-50% of the US pays a net zero in federal income taxes. The US has/had one of the highest corporate tax rates in the ‘world’ that you love so much. Plus the US taxes corporations based at home on profits abroad. So these companies pay local taxes in the country of origin, and extra at home. I think there is one other country that does the same double taxation: North Korea. This is why there are trillions parked overseas, and this bill aims to bring some of that back to our shores. But keep on preaching about deficit reduction, you didn’t care much about that the last 8 years, what a coincidence?

      • Cuffdaddy

        At least MC is bringing his uninformed short stories to a relevant article for once.

      • Michael Castellano

        Virtually every country in Europe has higher tax rates that the U.S. I’ve worked all my life and have paid taxes and I aint wealthy. I also pay plenty of taxes locally. What you mean by “the world you love” suggests that you fear and .hate this world. The wealthy should pay taxes, or am I suppose to feel sorry for billionaires and large corporations and the banks on Wall Street. They may control wealth and it those of us that work for a living that produce that wealth. Tax cuts will only make matters worse and are not deserved, as there is absolutely no requirement that the tax breaks will be used for anything of public value. BTW, deficit reduction is a true conservative argument and makes sense unless the funds that become available through deficit spending and are earmarked for infrastructure work. Which is nearly impossible to fund any other way. The deficit spending during the Great Depression eventually more than paid for itself. Don’t expect that to happen with this tax “reform”. And why do you bring up North Korea, which has no currency and has itself become a criminal state? Making it actually have some things in common with our own present government. Neither place has any respect for democracy, the rule of law, or freedom of the press.

  • Larry Ensor

    Thank you, this I already know. I don’t see any “loop holes”. At least none that I would consider “loop holes”. The fact is the majority of businesses can take “advantage” of all sorts of deductions. As can individual income tax payers.

    But most of us have to pay a tax accountant to figure it out.

  • Tres Abagados Stupidos

    If there was ever an image for the user’s profile that was PERFECT it is yours. Congratulations on at least getting that right. MAGA!!

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