Tax reform

Senate Unveils Tax Reform Details

Posted Nov 11 2017

The following is from the American Horse Council:

Senate Unveils Tax Reform Details, Doubles Estate Tax Exemption without Full Repeal

On the heels of the House of Representatives’ release of the Tax Cuts and Jobs Act (H.R. 1) last week, the Senate Finance Committee began to roll out details related to its tax reform bill on Thursday afternoon, not releasing text and an official revenue “score” until Thursday night. There are some major differences between the two bills that both chambers must reconcile prior to presenting legislation to the president’s desk for his signature. Notably for the equine and broader agriculture sectors, the senate plan would double the exemption for the estate tax without eliminating it altogether, as provided in H.R. 1. The Senate Finance Committee will begin to mark-up the legislation on Monday, November 13. Please see the below highlights, outlining some key provisions that will impact the equine industry:

Business Provisions

Corporate Tax Rate: The senate bill delays reduction of the corporate tax rate from 35 percent to 20 percent until 2019. By contrast, H.R. 1 provides an immediate corporate tax cut, effective in 2018.
Expensing: The senate bill provides “100% bonus depreciation within five years,” which is similar to a provision in H.R. 1.
Business Interest: The plan states that small businesses will be able to deduct interest on loans intended to finance the growth of operations and inventory.
Alternative Minimum Tax (AMT) – Like H.R. 1, the senate bill eliminates the unpopular AMT, which doubles the amount of time taxpayers must spend to calculate their business or individual tax liability within any given year.

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Individual Provisions

Estate Tax: The senate bill doubles the amount of the estate tax exemption, currently valued at $5.39 million for individuals, but falls short of an outright repeal. By contrast, H.R. 1 eliminates the estate tax within six years of enactment. AHC partners are already reaching out to senators to offer a repeal amendment during the mark up scheduled to begin early next week.
State and Local Taxes (SALT) – The senate bill includes a full repeal of the SALT deduction for individuals. The House bill, however, includes a compromise provision allowing limited deductions for state and local property taxes.
Mortgage Interest: Senators state that the provision will cap the deduction for mortgage interest indebtedness at $1 million. H.R. 1, however, establishes a $500,000 cap on interest from new home purchases, a provision drawing criticism from the homebuilders.
Charitable Contributions: In cases of individual cash contributions, the senate bill increases the percentage-limit deduction from the current rate of 50% to 60%.

Next Steps

Because of the major differences between the House and Senate tax bills, the two chambers will likely convene a conference committee to negotiate a final package to send to the president. The House Ways and Means Committee concluded its four day mark-up of H.R. 1 on Thursday afternoon, and will send the bill to the floor for a vote next week. This puts the House on track to pass its tax bill prior to the Thanksgiving Holiday. The Senate, however, will likely vote on its final package after Thanksgiving, according to a statement from Senate Majority Whip John Cornyn (R-TX).
To keep track of ongoing tax policy developments, AHC is conducting a webinar featuring congressional and industry presenters on Monday, November 13 at 3:00 PM ET. To view a copy of an outline of the bill’s key provisions and revenue impacts, please click here: https://www.finance.senate.gov/imo/media/doc/11.9.17%20JCT.pdf. To see a two-page copy of the plan’s “policy highlights,” please click here: https://www.finance.senate.gov/imo/media/doc/11.9.17%20Policy%20Highlights.pdf
To view a 253-page description of the bill’s provisions, please click here:
https://www.finance.senate.gov/imo/media/doc/11.9.17%20Chairman’s%20Mark.pdf

For more information, please contact Bryan Brendle, Director of Legislative Affairs, at bbrendle@horsecouncil.org.

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House Releases Tax Reform Details

Posted Nov 3 2017

The following is from the American Horse Council:

House Releases Tax Reform Legislation, Moves Forward with Small Business, Estate Tax Relief

The House Ways and Means Committee has shared highlights and text on historic tax reform legislation, the Tax Cuts and Jobs Act of 2017. While highlights from the bill are outlined below, AHC is currently reviewing the fine print of the 429-page legislation, received from the tax committee shortly after 12:00 PM ET. Today’s release initiates a long over-due effort to streamline the nation’s 70,000 page tax code. In a move that is consistent with advocacy from the equine industry and its allies, the House bill will repeal the estate tax after six years, and reduce rates for small business, or so-called “pass through” entities. Please see the below highlights, focusing on issues that have the most significant impact on the equine industry:

Business Provisions

Small Business: The bill sets a maximum tax rate of 25 percent on small business, or “pass through” entities. Under current law, small businesses can pay federal taxes at rates as high as 39.6 percent.
Corporate Tax Rate: The bill lowers the corporate rate to 20 percent, down from the current 35 percent corporate tax rate.
Expensing: The plan will “allow business to immediately write off the full cost of new equipment.”
Business Interest: The plan also states that small business will be able to deduct interest on loans that allow job creators to “hire workers and increase paychecks.”

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Individual Provisions

Estate Tax: The House bill will repeal the estate tax after six years, and double the current exemption on estates valued at $5.49 million. This is a positive development for family-owned farms and businesses.
Charitable Giving: The plan “continues the deduction for charitable contributions.”
Mortgage Interest: The bill preserves the deduction for existing mortgage interest, and establishes a $500,000 cap on interest from new home purchases
Streamlined Tax Brackets: The plan consolidates the number of individual brackets from seven to four. Under the House bill, the IRS will create brackets at rates of 12 percent, 25 percent, 35 percent and preserve the 39.6 percent on higher income earners.
Retirement Savings: The plan “retains retirement plan options” including 401(k)s and Individual Retirement Accounts.
Alternative Minimum Tax (AMT) – The plan eliminates the unpopular AMT, which doubles the amount of time taxpayers must spend to calculate their tax liability within any given year.
In a compromise that has bogged down negotiations, the House plan will retain the deduction for state and local property taxes at amounts up to $10,000.

Path Forward

According to congressional sources, the Ways and Means Committee will mark up the legislation for four days, beginning the week of Monday, November 6. The bill will go to the House floor for a vote before Thanksgiving, which falls on Thursday, November 23. According to Senate Majority Whip John Cornyn (R-TX), the Senate will take up tax reform legislation after Thanksgiving.

To learn more about up-to-date activity related to tax reform, AHC is conducting a webinar on the issue featuring congressional and industry perspectives on Monday, November 13 at 3:00 PM ET. To view a copy of a two-page summary of the bill’s highlights, please click here: Tax Policy Highlights. To review a copy of the bill, please click here: now available online.

For more information, please contact Bryan Brendle, Director of Legislative Affairs, at bbrendle@horsecouncil.org.

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Topic and Speakers Announced for AHC’s 4th Quarter Webinar

Posted Oct 27 2017

The following is from the American Horse Council:

Topic and Speakers Announced for 4th Quarter Webinar

Tax Reform and its implications to be discussed

The AHC is pleased to announce the topics and speakers for its 4^th Quarter webinar, which will take place Monday, November 13^th at 3:00 pm ET.

“Will the grass be greener on the other side of Tax Reform?” will be the focus of the webinar, and will feature speakers Danielle Beck, Director of Government Affairs for the National Cattlemen’s Beef Association (NCBA); Liz Minneman, Senior Legislative Assistant to Congressman Andy Barr (R-KY); and Alex Waldrop, President & CEO of the National Thoroughbred Racing Association (NTRA).

The equine industry and its partners in the agriculture and small business sectors continue to engage Congress and the Administration on key elements of the GOP’s ‘unified framework for tax reform’ that was released on September 27. The AHC feels it is important to provide the industry with some detailed background information as to how this plan will affect them or their business, as well as get insights from other segments of the agriculture industry and Capitol Hill itself.

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Danielle Beck serves as NCBA’s Director of Government Affairs and is the lead lobbyist for a broad policy portfolio, including all legislative and regulatory issues pertaining to tax and credit, nutrition/dietary guidelines, food safety, research, energy and disaster assistance. Danielle also oversees NCBA’s annual appropriations strategy and is the staff liaison to NCBA’s Tax & Credit Policy Committee. Prior to joining NCBA, Danielle represented clients across the food and agriculture sector as a lobbyist for The Russell Group. Before that, she spent five years on Capitol Hill working for Congressman Tom Rooney (R-FL), where she managed his work on the Agriculture Appropriations Subcommittee and House Agriculture Livestock Subcommittee Chairmanship.

Liz Minneman is Senior Legislative Assistant to Congressman Andy Barr (R-KY) where she handles the Congressman’s tax, health care, housing, and labor portfolios. Prior to coming to Capitol Hill in 2016, Liz was a research associate in economic policy at the American Enterprise Institute, focusing on health care and labor issues. She is a 2015 graduate of the University of Virginia where she earned a dual degree Bachelor’s in American Government and a Master’s Degree in Public Policy. She has contributed to publications including The OECD Journal on Budgeting and TheEconomist, and has made media appearances on Fox News and Al Jazeera.

Alex Waldrop is President & CEO of the NTRA, where he leads the Thoroughbred industry’s national office responsible for matters pertaining to federal legislative advocacy, racing safety and integrity, marketing and promotion of the sport, group purchasing and management of issues of national significance to Thoroughbred racing. Mr. Waldrop is Chair of the Racing Medication and Testing Consortium Board of Directors, a Trustee and Treasurer of the American Horse Council, and Chair of the American Horse Council Racing Advisory Committee. Mr. Waldrop spent 13 years with Churchill Downs Incorporated, as President and General Manager of Churchill Downs Racetrack from 1999 to 2002, as General Counsel from 1992 to1998, and as senior vice president, Public Affairs from 2003 to 2004. He is also a former equity partner in the Louisville office of Wyatt Tarrant & Combs where he was the Chair of the firm’s Equine, Gaming & Entertainment Practice Group.

The webinar is open to both AHC members and non-members—we encourage everyone to attend! To register for the webinar, please click here.The webinar lasts approximately one hour, and will allow for Q&A at the end of each speakers presentation. If you have any questions, please contact Ashley Furst at afurst@horsecouncil.org. We look forward to having you join us for our final 2017 webinar!

GOP, Equine Industry Canter Toward Tax Reform

Posted Oct 6 2017

The following is from the American Horse Council:

GOP, Equine Industry Canter Toward Tax Reform

The equine industry and its partners in the agriculture and small business sectors continue to engage Congress and the Administration on key elements of the GOP’s “unified framework for tax reform,” released on September 27. While the framework outlines broad themes for reform, AHC and its partners are focusing efforts on repeal of the estate tax, also known as the “death tax,” as a pillar for a 21^st century tax code. Below are summaries of tactics used to move the legislative process forward, and highlights from conversations with congressional and administration officials.

Congress Hears from Small Business, Agriculture
On September 12 – two weeks prior to release of the GOP framework – AHC joined nearly 150 small business groups in a coalition letter to congressional leadership urging full repeal of the estate tax. When the government imposes estate taxes on an equine operation, surviving family partners may be forced to sell equipment and other assets to save the family business. Signatories represent a cross-section of American business, including builders and contractors, grocers, truckers and cattlemen. Advocates emphasized the fact that repeal of the estate tax would not only cost the treasury relatively little revenue in the short term, but ultimately increase tax revenues by $145 billion over a ten year period. Underscoring minimal, short-term impacts on the federal budget is crucial to moving tax reform through the budget reconciliation process, which requires Congress to demonstrate that the new and improved tax code will ultimately achieve deficit reduction.

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“Budget Reconciliation,” a Procedural High Jump
Before moving forward with a tax reform bill, Congress must first pass a federal budget for FY2018 which includes instructions for tax legislation. The process, known as “budget reconciliation,” allows the Senate to pass a bill with 51 votes, therefore bypassing the 60 vote threshold necessary to avoid the filibuster that applies to most legislation. This parliamentary tactic is crucial for tax reform legislation, where Republicans must receive the support of the vast majority of their Senate members to pass a bill. On October 4, AHC joined more than 40 agriculture groups – including the American Farm Bureau Federation and American Veterinary Medical Association – in a letter to Congress expressing support for passage of a budget resolution with reconciliation instructions for tax reform. On October 5, the House of Representatives passed its $1.132 trillion budget, which it claims will achieve $6.5 trillion in deficit reduction over ten years.

Attention now turns to the Senate, which is expected to consider a $1.5 trillion budget during the next four weeks. To make sure lawmakers remain focused on the tax reform process, please call your senators and tell them “to pass a budget today that paves the way for tax reform.” You can contact your senators’ Washington offices by calling the Capitol switchboard at 202-225-3121.

Status of the Debate
AHC and its partners have met this week with congressional leadership offices and White House staff, who remain optimistic that substantial progress toward tax reform will take place during the weeks ahead. Policy makers have also made it clear that to push tax reform across the finish line, the legislation must include major provisions that bolster the middle class. To that end, officials have underscored the importance of mortgage interest and charitable giving deductibility, the prospect of lower rates through consolidated deductions, and the overall simplicity of a streamlined code. The House Ways and Means Committee has created a template “postcard” to illustrate the taxpayer-friendly approach favored by proponents of reform. To view a copy of the proposed, streamlined tax form, click on the following link: https://waysandmeans.house.gov/tax-form-simple-fit-postcard/.

Horsemen and horsewomen can deliver a timely message by contacting their elected officials and expressing the need to modernize the code in general, and specifically to repeal the outdated death tax . Other issues that will emerge as the debate moves forward will include deductibility of business interest, expensing of depreciable assets, and establishing a top rate of 25% for sole proprietorships, Subchapter S-Corporations, and other small business entities. If you would like more information related to tax reform, please contact Bryan Brendle at bbrendle@horsecouncil.org.

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GOP Leaders, Administration Unveil Tax Reform Plan, New IRS “Winnings” Rule

Posted Sep 28 2017

The following is from the American Horse Council:

GOP Leaders, Administration Unveil Tax Reform Plan, New IRS “Winnings” Rule

Speaker Paul Ryan (R-WI) will officially unveil the GOP template today at 2:15 PM EST. To view today’s event via livestream, please go to the following link: speaker.gov/live.

On September 27, 2017, GOP leaders released a “template” laying out key elements to characterize comprehensive tax reform legislation. The nine-page document identifies significant tax breaks for individuals and corporations, and includes a special focus on tax relief for small business. Below are highlights that will have the most significant impact on the equine sector, among other corporate and individual taxpayers:

Business Reform

Small Business : The framework establishes a maximum tax rate of 25 percent on small businesses operating as “sole proprietorships, partnerships and S corporations.” With an increasing number AHC members filing as sole proprietorships and partnerships, this can potentially provide significant tax relief. Under current law, small businesses (pass-through entities) can pay federal taxes at rates as high as 39.6 percent.
Corporate Tax Rate : The plan proposes to lower the corporate rate to 20 percent, down from the current 35 percent corporate tax rate.
Expensing: The GOP framework “allows businesses to immediately write off the cost of … depreciable assets” for five years or more.
Business Interest : The plan imposes “partial limits” for deduction of business interest on C corporations. The tax writing committees will review interest deductions for non-corporate taxpayers during the legislative process.

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Individual Reform

Estate Tax : The GOP proposes to eliminate the estate tax and the “generation skipping transfer tax.” This is positive news for family-owned operations.
Streamlined Tax Brackets: The plan consolidates the number of individual brackets from seven to three. Under the proposal, the IRS will create three tax brackets at rates of 12 percent, 25 percent and 35 percent.
Standard Deduction: The plan will double the standard deduction to $24,000 for married couples filing a joint return, and $12,000 for single taxpayers.
Alternative Minimum Tax (AMT) – The GOP proposes to eliminate the unpopular AMT, which doubles the amount of time taxpayers must endure to calculate their tax liability within any given year.
Itemized Deductions : While GOP leaders state that many of the deductions that “riddle the tax code” will go on the chopping block, the plan keeps deductions for mortgage interest and charitable contributions.

Next Steps

AHC is conducting meetings with congressional tax writers in conjunction with major agriculture stakeholders, including the American Farm Bureau Federation and National Cattlemen’s Beef Association, among others. So far, the coalition has focused on repeal of the estate tax and the need to expense capital investment as pillars of the tax reform process moving forward, two messages which are clearly laid out in the GOP template. To view a copy of the GOP framework, please click HERE.

To learn more details about the tax plan, Speaker Paul Ryan (R-WI) will officially unveil the GOP template today at 2:15 PM EST. To view today’s event via livestream, please go to the following link: speaker.gov/live.

IRS Releases New “Winnings” Rule

Also on September 27, the Internal Revenue Service (IRS) published final rules in the Federal Register (FR) to reform federal withholding and reporting requirements for pari-mutuel winnings. The new rule arises from a notice of proposed rulemaking issued in late 2016, on which the equine industry submitted comments, laying the groundwork for the new regulatory flexibility. The tax rules will effectively exempt large numbers of winnings from the federal definition for “amount of wager.” The new threshold effectively exempts a large number of bets from triggering the imposition of a 20 percent withholding on winnings, thereby reflecting a consumer trend toward “exotic wagering pools” in modern betting. To view a copy of the final rule, which will be effective 45 days following today’s publication in the FR, please see the following link: https://www.gpo.gov/fdsys/pkg/FR-2017-09-27/pdf/2017-20720.pdf.
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