House Ways and Means Committee Chairman Kevin Brady (R-TX) on November 2, 2017 introduced a 429-page “Tax Cuts and Jobs Act” (HR 1) that would make dramatic changes to the taxation of businesses and individuals.
Chairman Brady released a substitute amendment to the bill on November 3, and announced that he intends to offer additional amendments for Ways and Means Committee ‘markup’ sessions scheduled to begin on November 6. Chairman Brady’s November 3 changes include accelerating the use of a ‘chained’ consumer price index (CPI) to adjust for inflation certain tax provisions (such as individual tax brackets) and striking a proposal in the bill that would have limited tax treaty benefits for certain deductible payments.
Below is a general summary of select business and individual tax proposals in Chairman Brady’s bill as modified (the ‘bill’), along with links to explanations and updated revenue estimates released by the Ways and Means Committee and Joint Committee on Taxation staffs.
Observation: The legislation is proposed to be generally effective for tax years beginning after 2017. Certain provisions have separate effective dates, most commonly after date of introduction (November 2, 2017), but others are effective after the date of enactment and some are effective for tax years beginning after 2016. The bill also proposes some temporary measures and provides transition rules for certain proposals.
For a brief outline of Ways and Means Committee Chairman Brady’s bill as originally introduced and coming steps in the tax reform process, see our November 2 PwC Insight. We will be providing additional analysis of House and Senate tax reform legislation in coming PwC Insights.
The release of tax reform legislation by Ways and Means Committee Chairman Brady marks a critical step in the legislative effort to overhaul the US tax system. Significant political hurdles must be overcome in order for Congress to succeed in enacting sustainable reform of US tax laws, providing a more competitive tax system for business taxpayers and improved economic opportunities for individuals and families.
Stakeholders considering the effects of business and individual tax reform proposals noted in this summary will need to consider the overall benefits of reforms intended to boost US competitiveness and productivity through lower business tax rates, a modernized international tax system, and incentives to invest in the United States.