On Sept. 27, 2017, a group of senior White House officials and Republican leadership in the House and Senate released a tax reform blueprint that includes several major provisions aimed at reducing complexities in the tax code and promoting growth and investment. There are several key provisions that are important to private forest owners, including:
- Elimination of the Death Tax
Repeals the death tax and the generation-skipping transfer tax.
- Immediate Expensing of Capital Investments
Allows businesses to immediately write off (or “expense”) the cost of new investments in depreciable assets other than structures for at least five years.
- 25% Rate for Pass-through Entities
Limits the maximum tax rate applied to the business income of small and family owned businesses conducted as sole proprietorships, partnerships and S corporations to 25 percent.
FLA will be aggressively advocating for tax reform in the Fall of 2017. Efforts will be focused on promoting key provisions noted above, while advocating for the preservation of federal timber tax provisions. There is no language in the current blueprint about timber tax provisions, specifically, but the plan does vaguely mention the need to “modernize” tax rules affecting specific industries.
Other Blueprint Details
- Reduces the corporate tax rate from 35 percent to 20 percent.
- Reduces the number of individual tax brackets from 7 to 3, with rates at 12 percent, 25 percent, and 35 percent.
- Doubles the standard deduction to $12,000 for individuals and $24,000 for couples filing jointly.
- Preserves the mortgage interest and charitable contribution deductions.
- Preserves incentives for work, higher education, and retirement security
- Eliminates several other, unnamed itemized deductions.
- Limits the deduction for net interest expense incurred by C corporations.
- Creates a 100 percent exemption for dividends from foreign subsidiaries where the U.S. parent owns at least a 10
- percent stake.
- Reduces the tax rate on foreign profits of U.S. multinational corporations in order to incentivize repatriation.
Eliminating The Death Tax
The Death Tax has been cast as a tax on America’s wealthiest families, but this is simply not true. This tax is particularly harsh on family forest landowners due to the capital-intensive nature of forest management. The current estate tax policy is in direct conflict with the desire to sustain private forests which are primarily family-owned by hindering sons and daughters from continuing the forestry legacy of their parents.
Learn more about other legislative efforts to eliminate the death tax, here.
Key Players: The Big Six
- Rep. Paul Ryan, Speaker of the House.
- Rep. Kevin Brady, House Ways and Means Committee Chairman.
- Sen. Mitch McConnell, Senate Majority Leader.
- Sen. Orrin Hatch, Senate Finance Committee Chairman.
- Steve Mnuchin, Treasury Secretary.
- Gary Cohn, Director of the National Economic Council