Chairman Releases U.S. Tax Reform Draft
After a year of deliberation and many questions over whether or not the timing is right, Chairman Dave Camp (R-MI) of the U.S. House Committee on Ways and Means, which has jurisdiction of tax issues, released his proposal for comprehensive tax reform. Conventional wisdom held that the Chairman wouldn’t introduce such a major piece of legislation in an election year with the risks that accompany putting such large and potential controversial changes on paper.
The plan proposes to phase-in a 25 percent business tax rate which reflects his 2011 discussion draft on a territorial tax. Many of the revenue raisers, including some that would affect non-corporate businesses, have also been proposed in some fashion by President Obama, former Senate Finance Chairman Max Baucus (D-MT) and current Finance Chairman Ron Wyden (D-OR). Key tax increases include, over 10 years, repealing accelerated depreciation ($270 billion), amortizing of research expenses ($193 billion), amortizing of advertising costs ($169 billion), a bank asset tax on the largest financial institutions ($86 billion), repealing the domestic manufacturing deduction ($116 billion) and repealing of last-in-first-out (LIFO) accounting ($79 billion).
Key business tax decreases include making the R&D credit permanent ($34 billion), eliminating the corporate AMT ($110 billion), and permitting small companies to expense the cost of certain assets ($55 billion). U.S. multinational companies would face lighter taxes on their future profits earned outside the country. They also would pay a one-time tax ($170 billion) on assets they’ve accumulated outside the U.S. under the current system.
While the proposal is just the starting point for discussion that will likely take years to resolve, SEMI is pleased to see that the draft reflects many of the principles that were developed by its members and shared with Chairman Camp in the fall of 2012. Those principles are:
1) Lower the top corporate tax rate from 35 percent
2) Retain tax incentives which promote innovation
3) Shift to a territorial tax system
SEMI will continue to work on this issue in the interest of its members. As the recipient of the 2012 SEMI Government Leadership Award, SEMI has a long-standing relationship with Chairman Camp and looks forward to continue to work with him and other leaders in Congress as the debate on how to best restructure the U.S. tax system to promote economic prosperity, competitiveness, and fairness. Any questions regarding this manner can be addressed to SEMI’s senior director, Public Policy, Jamie Girard at email@example.com.
March 5, 2014