Nov 9, 2017

House GOP tweaks final tax bill

Chairman Kevin Brady released changes to the tax bill. Photo: J. Scott Applewhite/AP

House Republicans are keeping the adoption tax credit and changing a provision on small businesses to shore up support for the bill, according to a new amendment released by Ways and Means Chairman Kevin Brady.

Why it matters: Brady is changing parts of the bill that had faced the strongest opposition from other Republicans.

What the new manager's amendment to the tax bill does:

  • Creates a new 9 percent tax rate — rather than the normal 12 percent rate — for the first $75,000 in income of businesses making less than $150,000 through a pass-through business. The rate is reduced for businesses making between $150,000 and $225,000, where it phases out. The lower rate is phased in over five years.
  • Keeps the adoption tax credit, which the original tax bill repealed.
  • Allows families with disabled children to move extra assets from a tax-advantaged savings account into an ABLE account.
  • Makes clear that military families will be allowed to deduct moving expenses.
  • Reduces corporate tax rate by lowering 80-percent dividends received deduction to 65 percent. Lowers the 70-percent dividends received deduction to 50 percent.
  • Gives an exclusion to the limit on deductibility of business interest for taxpayers who paid or accrued interest on "floor plan financing indebtedness."
  • Increases repatriation rate on foreign income to a 7 percent rate for illiquid assets (up from 5 percent) an 14 percent on liquid assets (up from 12 percent).

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