Category Archives: Of Interest

The Tax Cuts and Jobs Act

In the short span of six weeks, Republicans in the Senate and the House agreed to the most sweeping change in the Nation’s tax laws since the Tax Reform Act of 1986. The Tax Cuts and Jobs Act (“TCJA” will be passed without a single Democratic vote pursuant to the same Budget Reconciliation Rules used by the Democrats when they passed the Affordable Care Act — without a single Republican vote — which reformed our Nation’s health care system.   Most of its provisions will take effect on January 1, 2018.

Here are key changes to U.S. tax law for individuals and businesses under the TCJA:

Individual Tax Rates

(Note: Individual rate cuts would expire after 2025.)

Current law:

Seven rates, starting at 10 percent and reaching 39.6 percent for incomes above $418,401 for singles and $470,701 for married, joint filers.

New law:

Seven rates, starting at 10 percent and reaching 37 percent for incomes above $500,000 for singles and $600,000 for married, joint filers.

For joint filers:

10 percent: $0 to $19,050

12 percent: $19,050 to $77,400

22 percent: $77,400 to $165,000

24 percent: $165,000 to $315,000

32 percent: $315,000 to $400,000

35 percent: $400,000 to $600,000

37 percent: $600,000 and above

For single filers:

10 percent: $0 to $9,525

12 percent: $9,525 to $38,700

22 percent: $38,700 to $82,500

24 percent: $82,500 to $157,500

32 percent: $157,500 to $200,000

35 percent: $200,000 to $500,000

37 percent: $500,000 and above

Corporate Tax Rate

Current law: 35 percent

New law: 21 percent, beginning in 2018.

Corporate Alternative Minimum Tax

Current law: Applies a 20 percent rate as part of a parallel tax system that limits tax benefits to prevent large-scale tax avoidance. Companies must calculate their ordinary tax and AMT tax, and pay whichever is higher.

New law: Repealed.

Individual Alternative Minimum Tax

Current law: Individual AMT can apply after exemption level of $54,300 for singles and $84,500 for married, joint filers, and the exemptions phase out at higher incomes.

New law: Increase the exemption to $70,300 for singles and $109,400 for joint filers. Increase the phase-out threshold to $500,000 for singles and $1 million for joint filers. The higher limits would expire on Jan. 1, 2026.

Expensing Equipment

Current law: Businesses must take depreciation, spreading the recognition of their equipment costs for tax purposes over several years.

New law: Businesses can fully and immediately deduct the cost of certain equipment purchased after Sept. 27, 2017 and before Jan. 1, 2023. After that, the percentage of cost that can be immediately deducted would gradually phase down.


Current law: The U.S. taxes multinationals on their global earnings at the corporate rate of 35 percent, but allows them to defer taxes on those foreign earnings until they bring them back to the U.S., or “repatriate” them.

New law: U.S. companies’ overseas income held as cash will be subject to a 15.5 percent rate, while non-cash holdings will face an 8 percent rate.

Pass-Through Deduction

Current law: Pass-through businesses, which include partnerships, limited liability companies, S corporations and sole proprietorships, pass their income to their owners, who pay tax at their individual rates.

New law: Owners can apply a 20 percent deduction to their business income, subject to limits that will begin at $315,000 for married couples (or half that for single taxpayers). The tax rate for most qualifying pass-throughs will drop from 39.6 percent to around 30 percent.

Professional service pass-throughs, including consulting firms, will not be able to use the deduction.

Obamacare Individual Mandate

Current law: An individual who fails to buy health insurance must pay penalties of $695 (higher for families) or 2.5 percent of their household income — whichever is higher, but capped at the national average cost of the most basic, low-premium, high-deductible plan.

New law: Repeal the penalties.

Standard Deduction and Personal Exemptions

Current law: $6,350 standard deduction for single taxpayers and $12,700 for married couples, filing jointly. Personal exemptions of $4,050 allowed for each family member.

New law: $12,000 standard deduction for single taxpayers and $24,000 for married couples, filing jointly. Personal exemptions repealed.

Individual State and Local Tax Deductions

Current law: Individuals can deduct the state and local taxes they pay, but the value is subject to certain limits for high earners.

New law: Individuals can deduct no more than $10,000 worth of the deductions, which could include a combination of property taxes and either sales or income taxes.

Mortgage Interest Deduction

Current law: Deductible mortgage interest is capped at loans of $1 million.

New law: Deductible mortgage interest for new purchases of first or second homes will be capped at loans of $750,000 starting on Jan. 1, 2018.

Medical Expense Deduction

Current law: Qualified medical expenses that exceed 10 percent of the taxpayer’s adjusted gross income are deductible.

New law: Reduces the threshold to 7.5 percent of AGI for 2017 and 2018.

Child Tax Credit

Current law: A $1,000 credit for each child under 17. The credit begins phasing out for couples earning more than $110,000. The credit is at least partially refundable to qualified taxpayers who earned more than $3,000.

New law:  Doubles the credit to $2,000 and provides it for each child under 18 through 2024. Raises the phase-out amount to $500,000, and caps the refundable portion at $1,400 in 2018.

Estate Tax

Current law: Applies a 40 percent levy on estates worth more than $5.49 million for individuals and $10.98 million for couples.

Proposed: Double the thresholds so the levy applies to fewer estates. The higher thresholds would sunset in 2026.

Base Erosion and Anti Abuse Tax (BEAT)

Current law:  No provision

New law:  20 percent of all business tax credits, except for R&D, taken by foreign corporations or foreign affiliates of US corporations, will be included in a new minimum tax calculation.   After 2015, all tax credits, including R&D, will be included in the tax calculation.

Although the TCJA is the most significant change in our Nation’s tax laws since 1986, it is not the last word on tax legislation.   There will be technical corrections legislation introduced as early as next year, and the expiration of the individual tax rates, as well as other provisions, after 2025 assures major legislation in the near future.

Related Links:

James F. Miller
Tax Legislative Solutions, LLC
Phone: 202 489 3711



The Path to Tax Reform

The path to tax reform has proven to be much more treacherous than the pundits predicted when the Republicans won control of both ends of Pennsylvania Avenue back in November. The deep ideological divisions among House Republicans were exposed by their failure to reach consensus on a replacement for the Affordable Care Act and remain an impediment to reaching agreement on tax reform. Even before the House Ways and Means Committee can release and mark up a tax reform bill, however, Congress must pass legislation to keep the government funded beyond April 28 and then pass a Budget Resolution for FY 2018. The President has also called for another attempt to pass a replacement for the Affordable Care Act. The calendar is running, and only 47 legislative days (Congressional parlance for working days) remain before Congress breaks for the August recess. With hearings on tax reform in the Ways and Means Committee scheduled to begin in late April and proceeding well into May, it will be a tall order for Ways and Means Committee Chairman Kevin Brady (R-TX) to meet his self imposed deadline of passing a bill sometime in the Spring.

While the House wrestles with its own issues, the Senate Finance Committee has settled into behind the scenes staff discussions and meetings on various tax reform options. Senate Finance Committee Chairman Orrin Hatch’s favored approach to corporate tax reform, the dividends paid deduction (DPD) corporate integration proposal, is still in the mix but remains unpopular with his fellow Committee Republicans.  That proposal would allow corporations to deduct all of their dividends and would impose a withholding tax on dividends paid to all of their shareholders. Incentivizing corporations to pay out their earnings as dividends would potentially reduce the attraction of tax favored investments like the R&D and low income housing tax credits.

In view of the lack of consensus on Capitol Hill as to overall tax reform, Republican Leadership in Congress and the Trump Administration would be wise to take a page from President Reagan and keep it simple. President Reagan proposed in 1981 to lower the tax rates and allow for more rapid depreciation of machinery, plants and equipment. Congress gave him essentially what he asked for. It was not until two tax increase bills passed in 1982 and 1984 that President Reagan and Congress took up and passed tax reform in 1986. It would be wise for the Republicans to focus on where there is general agreement — even with Democrats — and come up with a proposal that lowers the top corporate rate, lowers the rate for pass throughs, allows for expensing of assets and provides for the repatriation of corporate earnings at a low rate such as 10 percent. A portion of the taxes raised from repatriation could be directed to infrastructure. Forget about making the bill revenue neutral. The object is to get the economy moving again.

James F. Miller
Tax Legislative Solutions, LLC
Phone: 202 489 3711

Why the Trump Administration prioritized Healthcare over Tax Reform

Many are questioning whether it would have been better strategy to begin with tax reform rather than repealing and replacing Obamacare. They do not understand that tax reform, as envisioned by the House and Senate Leadership, depended on first repealing the $1 trillion in taxes included in Obamacare.  As written, the spending cuts in the House Leadership plan more than offset the cost of repealing the taxes. That was vital to the tax reform bill to be taken up later this Spring because the repeal of those taxes would not have to be taken into account in the bill to maintain its revenue neutral balance in reaching a top corporate tax rate of 20 percent. Now, with the failure of the repeal and replace effort, either the House Leadership will have to leave the Obamacare taxes in place or come up with another $1 trillion in revenue offsets to maintain the revenue neutral balance. Speaker Ryan has indicated that the Republicans will probably leave the Obamacare taxes in place. If so, the tax bill to be taken up now can hardly be called tax reform. The tax code will continue to tax investment income at exceedingly high rates, and tax reform will not be able to turbocharge the economy. That is why, in the end game, the Congressional Republicans and President Trump will likely opt for a tax bill that cuts tax rates, reduces capital gains, allows for the repatriation of foreign earnings at less than half the top corporate rate and, importantly, jettisons the goal of budget neutrality. The tax cuts will last 10 years.

James Miller
Total Spectrum/Steve Gordon & Associates
507 Capitol Court NE #100
Washington, D.C.  20002
Cell: (202) 489-3711
Washington, D.C. – Arizona – Georgia – U.S. Virgin Islands


With the elections behind us and the Inauguration of President Trump on January 20, it is important to assess the new President’s plans for tax reform and how they will fit with the House Republican Blueprint for tax reform and what may happen in the Senate. But before we can make that assessment, it is equally important to gain some perspective as to what is expected to take place in 2017 that will have an impact on when tax reform is taken up. That will help inform strategy for stakeholders in tax reform. The timeline and activities suggested below take into account the desire of the White House and Senate and House Republicans to pass a tax reform bill this year. While fulfilling that desire necessitates an aggressive schedule that could very well be sidetracked, we need to prepare for it.



  • The Senate and House have passed a fiscal year 2017 budget resolution that instructs both chambers to meet certain budgetary goals in part by repealing the Affordable Care Act. This month’s action will not repeal the ACA but it establishes the foundation for committee action by January 27 and House and Senate Floor votes in February. At least five Senate Republicans and the President-Elect, however, support calling for repeal only if a replacement also is identified. If that approach were to be adopted, the legislative schedule on repeal and replace of the ACA will be thrown off course, as will the schedule for other items on the Republican agenda, including tax reform. The Congressional Republicans currently do not have a detailed replacement plan. Their failure to produce such a plan could hurt them politically and could cause major disruptions in the health industry – principally with insurers and hospitals.•     The Senate has held hearings and will continue to hold hearings on the President’s cabinet nominations. Most nominees will be approved in January and early February because they require only a simple majority, but it is possible that one or two could get tripped up. The hearing dates for the Treasury Secretary nominee, Steven Mnuchin, have not been set.


  • Once taking office, the new President will take action to repeal many of President Obama’s executive orders and direct agencies and departments to delay or halt further action on regulations recently promulgated. Congress will have already begun the process of repealing certain regulations through the Congressional Review Act with a focus on energy and the environment.


  • President Trump is expected to nominate someone to take the place of the late Justice Scalia on the Supreme Court. The approval process is expected to be treacherous in the current political environment because, at least as of now, approval requires 60 votes.
  • The Senate Finance Committee and the Ways and Means Committee are expected to hold hearings on tax reform to build a foundation for the advancement of tax reform legislation later in the year. The process will begin in earnest in February but will be very fluid through most of the year.
  • The Senate and the House are both expected to vote on legislation to repeal the ACA in early February which will provide a two or three year transition period to a new system. The House and Senate will consider various replacement options which will be considered later in the year.
  • President Trump is supposed to submit his first budget for FY 2018 to Congress but the timing may slip. His budget will outline in more detail his tax and spending priorities. Congress will write its own budget but will try to meet the President’s priorities. The release of the President’s budget should provide a clearer idea on the President’s views on tax. In addition, he may also address how he proposes to handle his campaign promise to initiate a $1 trillion program for infrastructure.
  • President Trump is also expected to deliver his first State of the Union address which will also detail what he will prioritize this year. This will also be an opportunity for the President to address tax reform and infrastructure.


  • Dodd-Frank repeal legislation known as the CHOICE Act will begin to move through this process will take several months. The legislation will require Democratic votes to move in the Senate, and that is unlikely. The process may produce some limited results.


  • The nation’s debt ceiling of over $20 trillion will be reinstated on March 16. This will begin a process that will require Congress to extend the debt ceiling to allow for the government to pay its bills. Action is expected later in the year but the debt ceiling will be reinstated.


  • Both the House and Senate will pass another budget resolution, this one for FY 2018. It will have reconciliation instructions to advance a tax reform bill to be enacted in the Senate will only a simple Majority vote. Very few details will be included in the budget resolution.


  • The Ways and Means Committee is expected to begin the process of marking up a tax reform bill. This process could take weeks or it could be a shorter process, depending on the degree to which Chairman Brady will permit the Minority to participate through the amendment process. The end result, however, is expected to produce a bill passed strictly along Party lines.
  • The bill will then be sent to the House floor where it is virtually certain to pass, notwithstanding any potential defections by the unpredictable Freedom Caucus. The bill will then be sent to the Senate.
  • At the same time, the House Transportation Committee and Senate Commerce, Science and Transportation Committee may begin addressing how to implement a Trump devised program to provide over $1 trillion for transportation infrastructure. If the program requires a tax credit, then that program will be considered by the House Ways and Means Committee and the Senate Finance Committee. Its implementation as a tax program has the potential of derailing the House GOP Blueprint due to the revenues involved.


  • Chairman Hatch has not yet indicated when he expects to begin his markup process, but a few of his Republican colleagues expect to have their own blueprint on tax reform sometime in late Spring or early Summer.
  • Chairman Hatch is expected to try to produce a bipartisan bill. If he succeeds in doing so, it is likely to take place after a lengthy drafting and markup process that could stretch into July. In any event, votes in Committee would take place in the June-July time frame with the legislation going to the Senate floor for a floor vote perhaps sometime before the August recess. The Senate floor is where a number of amendments will be offered. The small Republican Senate majority (52-48) will empower moderates like Cassidy, Collins, Murkowski and, perhaps, Portman at this time. It will also give willing Senate Democrats a change to achieve changes to gain their votes. Regardless whether the Republicans chose ultimately to use Budget Reconciliation, it will be in their interests to attract Democrat votes.
  • The issue with this time frame is that both the House and Senate bills would be left hanging through the August recess when Members would be heavily lobbied back home in their States and Districts. Usually, Members try to avoid this scenario. Nevertheless, in view of importance of tax reform and the desire to achieve in n 2017, this may be unavoidable.


  • Congress will recess in August with or without a final tax bill. If past experience is a good teacher, it is likely that a final bill will be produced after the August recess. As will be explained, the August recess will be a time for opportunity for the industry to make any necessary points on the legislation.
  • When Congress returns in September, the House and Senate will need to reconcile the House and Senate tax reform bills. This will be a time of critical lobbying that will involve House and Senate Leadership, the Committee Leadership and key Senators whose votes can make a difference on the Senate floor. It is difficult to predict when this process will end but it could stretch well into the Fall.

1. President Trump’s Tax Proposals as Set Forth in the Campaign

  • Top corporate rate = 15 percent
  • No corporate AMT
  • Election between full expensing of assets or deductibility of interest expense
  • Eliminates all credits except R&D
  • Taxes capital gains and dividends at 20 percent
  • Eliminates the 3.8 percent tax on net investment income
  • Foreign Earnings Repatriation at 10 percent
  • Per the Tax Foundation, the Trump plan could lose $2.6 and $3.9 trillion on a dynamic scoring basis

2. House Republican Tax Reform Blueprint (published June 2016)

  • Top corporate rate = 20 percent
  • No corporate AMT
  • Dividends and capital gains would be taxed at 50 percent of the top individual rate (top individual rate = 33 percent)
  • Eliminates the 3.8 percent tax on net investment income
  • Preserves the R&D corporate tax credit but is silent about the LIHTC, Bonds and other credits
  • Full expensing of all assets (except land) in the year placed in service
  • Interest deductibility limited to interest expense

3. Senate Finance Committee

  • Chairman Hatch originally backed what he called a dividends paid deduction approach to corporate tax integration. However, in view of the similar approaches to tax reform taken by President Trump and the House Republicans – focusing on comprehensive tax reform – Hatch no longer is pushing his plan. Instead, he is taking a wait and see approach while he develops his own plan in his Committee.


  • With Republican control of the White House and both houses of Congress, the odds of tax reform of some nature being enacted have greatly increased.
  • The question is “What type of tax reform”: corporate only, individual only, both corporate and individual, international only.
  • A critical question is whether the legislation will be revenue neutral or whether it will lose revenue.
  • If the Republicans choose to pass tax reform through the budget reconciliation process (requiring only a majority vote in the Senate), the legislation must not lose revenue beyond the 10 year budget period (the Byrd rule).
  • If the legislation loses revenue beyond the 10 year budget window, then those provisions in tax reform that lose revenue would end in 10 years and prior law provisions – principally tax rates – would spring back. That is what happened to the Bush tax cuts for higher income families.
  • Trump has proposed a net tax cut while McConnell and Ryan have said that their tax reform proposals will be revenue neutral.
  • The House GOP Blueprint currently includes a $1.2 trillion revenue raise that is labeled a “border adjustment” provisions affecting exporters and importers. The proposal is highly controversial, and the Senate has not signed on to it. Resolution of this one provision will be a key issue, although it is expected to be included in final tax reform legislation that will most certainly pass the House. However, if the Senate does not go along, it would leave a huge revenue hold to fill in the tax reform bill.
  • Every tax preference in the Internal Revenue Code has substantial Congressional support, and key defenders with well-organized and funded advocacy efforts. For example, the National Association of Homebuilders has launched a major effort to protect the mortgage interest deduction. Charities are doing the same thing with respect to the charitable donation deduction. States and localities are also working to preserve the deduction for state and local taxes. Those are just three efforts, and there are dozens that are ongoing.
  • The process will be lengthy and could spill into next year – an election year which will make decisions much more difficult, particularly when an ACA replacement may not have yet been determined.
  • If the Republicans ultimately decide to go with budget reconciliation that requires only a majority vote, the tax reform plan that is adopted could suffer the same fate as the ACA: acceptance by only half the people and ultimate repeal efforts. The GOP could also suffer major losses in the elections.
  • Going the budget reconciliation route will empower the handful of moderate Republicans: Senators Cassidy, Murkowski and Collins. Senator Portman could also fit this profile and will empower him on the Senate Finance Committee.
  • If the Republicans decide not to go with budget reconciliation but seek to attract enough votes to reach 60, that will empower the Democrats in the Senate who may be willing to deal, particularly those in Red states which Republicans have carried for several elections. They include: Senators Manchin, Tester, McCaskill and Donnelly. However, to reach 60 votes, the Republicans will need at least 8 Democrats, and that means significant compromise.

The Playing Field

Congress returned today. Paul Ryan was re-elected Speaker in no surprise, and the House Republican Majority went to work.  Instead of immediately taking action to address the working class, rust belt Americans who helped elect Donald Trump and preserve the GOP Hill Majorities, the House GOP voted as its first order of business in secret to disband the House ethics committee. Although Republicans later reversed that vote after being called out by Trump himself, the action is a reminder of how out of touch many Republican Members remain with what is motivating people outside the Beltway.

On the other side of the Capitol, New Senate Miniority Leader Schumer delivered a speech on the Senate Floor designed to hold President Elect Trump accountable for all of his campaign promises.   As the most important Democrat now in Washington, Schumer will seek to cut deals with the Republicans – such as on infrastructure — but he will be looked at to carry the banner of the Democrat’s progressive policies.   If the Republicans seek bipartisanship at all on issues such as tax reform, Senator Schumer will be in the middle of the action.

As the 15th Congress begins, we still have many questions as to the shape and timing of tax reform.   We may not have many answers soon because Congress will be occupied with confirming Trump’s cabinet nominees, and many of those will be very contentious, including Steven Mnuchin as Treasury Secretary.  Nevertheless, because the nominees now cannot be filibustered, I expect them all to be confirmed.

The incoming Trump Administration is also expected to put a Supreme Court nominee in place, perhaps even before the Inauguration. That will start  a major fight early on.  And the nominee can be filibustered.

I also expect that the House will immediately put into the works the Congressional Review Act, as it seeks to replace regulations promulgated by the Administration within the past 60 legislative days. That could stretch back six months to June 2016.

The House and Senate are also dead set on taking up a stripped down budget resolution for FY2017 that would repeal the Affordable Care Act. Senator Enzi authored the budget resolution which was introduced today in the Senate.   It sets a date for the Committees of jurisdiction to prepare bill language by January 27 which would then be turned over to the budget committees to be folded into a bill. The budget resolution will be debated this week and probably next.  Once it passes the Senate, it will go directly to the House floor for a vote. Questions remain as to the effective date of any repeal, particularly as they relate to the taxes used to fund subsidies, such as the 3.8 percent tax on investment income. There is little doubt that the budget resolution calling for repeal will be passed. What eventually replaces Obamacare is still very much up in the air.

We also do not know yet when the Ways and Means Committee will release legislation language that implements the Blueprint. The staff either does not know or is not saying. It seems unlikely that we would see the language long before a Committee markup which would be scheduled after the next budget resolution is passed on or before April 15 for FY2018.  Why lay out the language for weeks and open it up to heavy lobbying? On the other hand, the Committee could issue discussion drafts and open them up to comment as happened prior to the time Dave Camp released his final bill.

The word we got from the Senate is that Chairman Hatch is not going to push his corporate tax integration proposal. Instead, following his one on one meetings with his fellow SFC Republicans, he and his staff will develop their own tax reform proposal. It became clear in his meetings that the GOP Members did not like the corporate tax integration proposal. They also have not bought into the House Blueprint.  Indications are that we will not see a tax reform proposal from the SFC until late Spring or summer.

As for the new Congress and how it interacts with the incoming Trump Administration, and its own tax proposals, several questions come up.

First, are we talking about tax cuts or tax reform?  President-elect Trump and congressional GOP leaders insist they will reform the US tax code in 2017. But real reforms such as eliminating tax preferences in return for rate reductions will be extremely controversial. Will lawmakers make those tough choices or just pass a big tax cut?  McConnell and Ryan have said that tax reform should be revenue neutral, in part to meet Senate rules that would limit tax reform to 10 years if the legislation loses revenue outside the 10 year budget window. But Trump has not yet said he would go along with revenue neutral tax reform. He also has not backed off his support for a $1 trillion infrastructure program, but incoming COS Rince Priebus did say that it would not be rolled out until the last half of the year.

Second, how about Timing. Trump aides and Hill leaders boldly predict that Congress will pass not one, but two, major tax bills by April. But making tax policy is notoriously complex and time-consuming. In addition, lawmakers and their staffs could well spend much of February and March bogged down in controversial Trump nominations and the Affordable Care Act repeal.

Third, who will get tax cuts? Trump’s nominee for Treasury Secretary, Steven Mnuchin, insists that high-income households won’t get an “absolute” tax cut. But the Tax Policy Center estimates that Trump’s most recent plan would cut millionaires’ taxes by an average of $317,000 in 2017. Will Congress pass a fundamentally different plan, or is Mnuchin wrong?

How much new debt will Republicans tolerate? This could prove to be the crucial question in 2017. Trump would add $7 trillion to the debt over a decade, even after accounting for economic effects, according to TPC. The House GOP blueprint would add $3 trillion. What is the upper bound that congressional Republicans, especially Senate deficit hawks, will tolerate?

Fourth, How will the bill be scored? Congressional Republicans will rely on dynamic scoring to measure the cost of their tax bill. But even including economic effects, tax cuts such as those offered by Trump and the House Republicans won’t generate as much growth as backers hope.  Indeed, TPC and the Penn-Wharton Budget Model found the Trump plan’s burgeoning debt would slow economic growth by 2025. Congress could try to solve this scoring problem by instructing the Joint Committee on Taxation to assume annual growth of, say, 4 percent when it models the cost of any tax bill. Such a projection would be worthless on the merits and damage JCT, but it could allow Trump and Congress to claim that their tax cut adds less to the deficit than it likely would.

How will business respond to Trumponomics? During the campaign, Trump repeatedly vowed to restore US-based manufacturing jobs. But his tax plan is likely to boost deficits and interest rates, which would raise costs to businesses. Similarly, a stronger dollar would make US exports less competitive as would tariff-induced broken supply chains. Will big tax cuts be sufficient to offset those effects, or will Trumponomics perversely slow US business investment and hiring?

Fifth, how will Congress treat specific tax preferences? Even a big tax cut is likely to target some existing tax breaks for businesses and individuals. But which ones, and by how much? Trump proposed a cap on individual deductions and promised to eliminate some unidentified business breaks. The House GOP has been largely silent on what preferences it would target. Most of the tax lobbying battles in 2017 will focus on these choices.

Sixth, will the tax cut attract Democratic support? Congressional Republicans blasted President Obama for cutting them out of the Affordable Care Act debate. The GOP is now faced with its own choice: Will it try to make any tax bill bipartisan by reaching out to Democrats? Will Democrats be willing to respond—and at what price?

James F. Miller
Tax Legislative Solutions, LLC
Phone: 202 489 3711


Led by Speaker of the House Paul Ryan and Ways and Means Committee Chairman Kevin Brady, the House Republicans just released a tax reform blueprint that will be a key plank on which they will run in November and then seek to pass in 2017. It is highly unlikely that any comprehensive tax reform measure will pass in 2017 regardless which Party wins the White House and controls the Senate or the House. However, the tax reform plan released by the House Republicans demonstrates their commitment to a simplified, pro-growth tax system. Those lobbying the House on tax matters must keep the blueprint in mind in calibrating their

The principal feature of the blueprint is a deep cut in the top corporate tax rate from 35 percent to 20 percent. To arrive at that goal, the plan specifically would eliminate the deductibility of corporate interest and would repeal most other corporate tax expenditures but without singling them out. Supporters of the tax expenditures on which the blueprint is silent would be wise in the coming months to pound the halls of House lawmakers to make the case for their retention in a reformed tax code.

As for individuals, the plan calls for reducing the number of individual tax brackets to three from seven, with rates set at 33 percent, 25 percent and 12 percent, compared to the current range of 10 percent to 39.6 percent. It would offer a substantial cut on capital gains and dividends, a provision aimed at rewarding savings that are invested. They’d be taxed at 16.5 percent, 12.5 percent or 6 percent, depending on how much the investor earned. The top rate is currently 23.8 percent. The plan would dramatically expand the standard deduction as well as the child tax credit by consolidating various exemptions and credits. That would drastically cut the number of people who itemize their deductions, to about 5 percent, Republicans estimate, from the current one-third. Though the plan does not say how they intend to change the mortgage and charitable deductions, it says tax writers are looking for ways to make them “more effective and efficient.”

With regard to multinational companies, the plan would move to a so-called territorial system, where the government would not attempt to tax companies’ overseas profits. The plan would apply a one-time 8.75 percent tax on money that is already overseas in liquid assets, with a 3.5 percent tax on money invested abroad in things like factories. As we analyze the House tax reform blueprint further, we will provide additional reports in the coming weeks.

Task Force on Tax Reform Releases Mission Statement

Task Force on Tax Reform
Releases Mission Statement

WASHINGTON, D.C. – In advance of the first idea forum today, Ways & Means Committee Chairman Kevin Brady, the chairman of the Task Force on Tax Reform, released a mission statement and broad policy goals. This marks the next step in the development of a bold, pro-growth agenda that Republicans will present to the country in the coming months.

Republican leaders launched the development of this agenda in January, announcing that it will address five issue areas: national security; jobs and the economy; health care; poverty, opportunity, and upward mobility; and restoring constitutional authority. Taking a bottom-up approach, committee-led task forces will develop this agenda, holding idea forums to take input and ideas from all members.

For additional updates, visit

Mission Statement: Create jobs, grow the economy, and raise wages by reducing rates, removing special interest carve-outs, and making our broken tax code simpler and fairer. 


1.    Make the tax code simpler, fairer, and flatter.

  • Reduce the number of pages in the tax code and reduce the length of tax returns and IRS instructions.
  • Ensure similar tax bills for taxpayers with similar incomes.

2.    Close loopholes, eliminate special-interest carve-outs, and limit the deductions, exclusions and credits that riddle the tax code today.

  • Reduce the number of hours Americans spend on tax filing and compliance.
  • Reduce the resources that are devoted to tax planning and tax avoidance.

3.    Ensure businesses, both large and small, have a competitive tax system.

  • Provide a fair and competitive tax rate for job-creating businesses.
  • Facilitate the growth of employers, regardless of size or form.

4.    End the tax code’s encouragement of the shift of jobs overseas.

  • Help American companies compete and win in the global economy.
  • Reduce the tax penalty for bringing overseas earnings home to invest in America.

5.     Remodel the tax code so it is built for economic growth.

  • Increase private sector employment, wages, and personal consumption.
  • Increase investment in business capital and gross domestic product.

6.    Do not allow the tax system to be used to bail out Washington’s spending problem.

  • Do not increase the tax burden on any income group.
  • Rely on controlling Washington spending, rather than higher tax burdens, to reduce the national debt.

Policy Reforms:

1.    Lower tax rates for families, small businesses, and corporations.

2.    Eliminate special-interest carve-outs.

3.    Reduce complexity in the tax code.

4.    Reduce the double taxation of savings and investment.

5.    Reduce the tax bias against headquartering businesses and locating jobs in America.


1.    Greater investment and employment, increased economic activity, and a larger economy.

2.    A stable and predictable tax code under which families and employers are best able to plan for the future.

3.    Business decisions that are driven by economic potential, not by tax considerations.

4.    Reinvestment of the growth generated by tax reform into further pro-growth reforms.

Paving The Way For Potential Tax Reform in 2017

With significant heavy lifting having taken place at the end of last year, the agenda of the Senate Finance Committee and the House Ways and Means Committee in this election year session of Congress is primarily to pave the way for potential Tax Reform in 2017. To be sure, Congress must take care of some urgent business, such as funding the Federal Aviation Trust fund by the end of March, a date that will probably be extended. Ways and Means Committee Chairman Kevin Brady, however, had made clear his intention of passing a bill through his Committee that will reform the way multinational corporations are taxed. While Chairman Brady and Senators Charles Schumer and Portman from the Senate Finance Committee have common ground on their approaches to international tax reform, significant differences stand in the way of the enactment of legislation. Not the least of these is the treatment of repatriated corporate earnings.

On the Senate side, Finance Committee Chairman Orin Hatch intends to introduce a “discussion draft” in March which proposes a dividends paid deduction (“DPD”) approach to ending the double taxation of corporate earnings. The Hatch “corporate integration” proposal, if enacted, could have a significant impact on tax expenditures. Although Chairman Hatch has indicated his desire to pass his corporate integration plan this year, the odds against enactment are long. Indeed, one element of the proposal would raise considerable opposition: the taxing of corporate dividends paid to tax exempt entities, such as charities and pension funds.

Most recently, the Obama Administration released its FY 2017 Budget which contains major tax increases which the Republicans in Congress have already said are DOA.

Fiscal Year 2017 Revenue Proposals

James F. Miller
Tax Legislative Solutions, LLC
Phone: 202 489 3711