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FACTBOX-White House lays out framework for tax reform
September 27, 2017 / 5:21 PM / 20 days ago

FACTBOX-White House lays out framework for tax reform

WASHINGTON, Sept 27 (Reuters) - The White House on Wednesday unveiled a long-awaited Republican tax reform framework that calls for lower tax rates for businesses and individuals as part of a comprehensive overhaul of the U.S. tax code.

The plan is intended as a guideline for the House of Representatives Ways and Means Committee and the Senate Finance Committee, the two tax-writing panels in Congress that are already at work on their own tax reform bills.

If enacted into law as written, the new framework would:

CORPORATE TAXES

* Reduce the U.S. corporate income tax rate to 20 percent from a current statutory 35 percent;

* Eliminate the corporate alternative minimum tax;

* Move to a territorial tax system that no longer taxes U.S. corporate profits overseas at the U.S. corporate income tax rate;

* Require U.S. corporations to return assets held overseas at separate, unspecified and lower one-time tax rates for invested assets and cash or cash equivalents;

* Establish a minimum global tax aimed at the overseas profits of U.S. corporations operating in tax haven countries; ‘PASS-THROUGH’ BUSINESSES

* Limit the maximum tax rate applied to small businesses to 25 percent, vs. current policy which taxes pass-through income at an individual tax rate of up to 39.6 percent; ALL BUSINESSES

* Allow immediate and full expensing of capital investments for at least five years;

* Partially limit the business tax deduction for debt interest payments;

* Retain tax credits for research and development and low-income housing;

INDIVIDUAL TAXES

* Lower the top individual rate from to 35 percent from 39.6 percent

* Increase the standard deduction for taxpayers to $12,000 from $6,300 for individuals and to $24,000 from $12,600 for married couples;

* Reduce the current seven individual income tax brackets to three brackets of 12 percent, 25 percent and 35 percent;

* Give the two tax-writing committees in Congress the flexibility to set a fourth bracket at a rate higher than 35 percent for the wealthiest Americans, to ensure that the overhaul plan does not shift the tax burden from higher to lower income households;

* Repeal the deduction for state and local tax payments;

* Eliminate the $4,050 personal exemption for taxpayers and their family members;

* Create an unspecified but “substantial” increase in child tax credit, which currently stands at $1,000. It also would raise the income limit to qualify for the credit and eliminate the higher qualifying income rate for married couples;

* Create a $500 tax credit for taxpayers with non-child dependents;

* Repeal the individual alternative minimum tax on higher income taxpayers;

* Eliminate unspecified itemized deductions that would impact 30 percent of taxpayers and 25 percent of families;

* Retain deductions for mortgage interest payments and charitable deductions, along with tax incentives for higher education, retirement and work;

* Repeal the estate tax. (Reporting by David Morgan; Editing by Alistair Bell)

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