June 24, 2016
House Republicans on Friday released their tax plan, A Better Way.
They say it will simplify the tax system and lower tax rates.
House Republicans have unveiled their tax plan, which they call their vision for a confident America. (Photo: roshi11/Thinkstock)
Components of the plan include:
-Eliminating the alternative minimum tax.
-Eliminating the estate tax.
-Repealing the entitlement program created by Obamacare.
-Consolidating the current seven tax brackets to three and lowering the top individual income tax rate to 33% from 39.6%. The brackets will be indexed for inflation.
-Creating a new business tax rate for small businesses organized as sole proprietorships or pass-through entities with a maximum tax rate of 25%.
-Reduced tax on investment income. Families and individuals will be able to deduct 50% of their net capital gains, dividends and interest income.
-Consolidating the basic standard deduction, the additional standard deduction and personal exemptions for families and individuals.
-Elimination of the marriage penalty.
K-Coe, a leading national agricultural accounting firm, said the proposal appears to have some benefits for farmers.
“This appears to be a great start to an important effort,” said K·Coe Isom CEO Jeff Wald. “Farmers in the United States support the goals of lowering tax rates and simplifying the tax code, provided those efforts don’t take away the flexibility farmers rely upon for their businesses and for financial planning.”
According to K-Coe, some of the items that could affect farm businesses include:
-Providing all businesses with the benefit of full and immediate write-offs of their investments in both tangible and intangible assets.
-Repealing all estate taxes.
-Repealing the Alternative Minimum Tax.
-Streamlining the current seven-tiered tax rate structure of 10 to 39.6% for individuals to a lower three tax brackets, 12, 25 and 33%.
-Lowering the corporate tax rate to 20%.
-Reducing the double taxation of corporate income through the reduction of tax on dividends and capital gains of individual shareholders.
-A new 25% business tax rate for small businesses that are organized as sole proprietorships or pass-through entities.
“While this proposal doesn’t have all of the details worked out, this appears to be a good-faith start at an effort that could benefit farmers,” added Wald. “We are particularly pleased that this effort did not propose removing farmers’ ability to use cash accounting, as had been proposed in previous tax reform bills.”
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