According to Kiplinger the Republicans are starting to position themselves for the “goring of the bulls” tax plan that I was informed would occur for 2017.
The plan that Kiplinger lays out would have C-Corporations pay tax at a flat 20% rate, down from the 35% maximum rate under current law.
This reduction would be paid for by business income from S-Corporations, partnerships, LLCs and sole props pass through to their owners after being taxed at a 25% top rate. Presumably then to be taxed again at the personal level, when it passes to the personal tax returns. Though this has not spelled out completely yet.
Most asset purchases could be immediately expensed, with land is the exception.
Firms would still be able to use the LIFO method of accounting for inventory. Also companies could benefit from the research and development credit. Most other tax breaks would be eliminated: suchas the 9% domestic production deduction and carrybacks of net operating losses.
Losses will have to be carried forward indefinitely; presumably only for C-Corporations, since the pass through entities will pass through the losses to the personal tax returns.
The interest expenses deduction that companies will be allowed to claim will be limited.
It could offset only interest income, with excess interest expense carried to future years.
For international taxes, House Republicans advocate a territorial tax system, so only income earned within U.S. borders would be taxed. Previously untaxed income held abroad as cash or cash equivalents could be repatriated at an 8.75% tax rate.
This plan will have devastating negative effects on small businesses. It seems to be geared only for Fortune 100 companies with a strong international business presence.