House Republicans released a sweeping tax reform bill Nov. 2 that would overhaul individual and business taxes. The Tax Cuts and Jobs Act is now in mark-up in the House Ways and Means Committee and represents a major step forward in the tax reform process.
Grant Thornton has put together an analysis, Breaking down the tax reform bill [PDF]
, that provides an in-depth explanation of what is inside this landmark legislation. Our analysis picks apart the 400-plus pages of legislative language to provide a clearer picture of the potential implications for businesses and individuals.
The Joint Committee on Taxation estimates that the bill would reduce revenue by $1.487 trillion over the next 10 years, within the $1.5 trillion allowance provided by the budget reconciliation instructions. But reconciliation also precludes any revenue loss outside the budget window, and the bill appears to lose significant money after 10 years.
Uncertain how the tax bill will impact you? Download our analysis.
Very few of the new tax benefits are temporary, and none of the rate cuts sunset. In addition, many of the revenue-raisers would increase receipts only within the 10-year budget window. The bill will likely have to be modified significantly before it can comply with reconciliation rules. Options include adding additional revenue-raisers, dialing back rate cuts and other beneficial changes, or allowing broad sections to expire, much like the 2001 and 2003 tax cuts.
There are clearly still many hurdles to enactment, and the proposals will evolve as the process moves forward. Still, the House bill represents a significant starting point for a potential full tax reform bill that would have far-reaching implications for taxpayers of all income levels.
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