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Congress Proposes Comprehensive Tax Reform

Last week, Congress announced its comprehensive tax reform package after many months of deliberations. The package addresses both corporate and individual taxes.

Regarding corporate tax policies, the package proposes 100 percent expensing in the first year for capital equipment and a lower 25 percent pass-through rate for companies such as S corporations, partnerships, and small businesses. In 2008, ISRI achieved a permanent 50 percent acceleration allowance for qualified recycling equipment (RISE) under the small business section 179 provisions. ISRI lobbied to retain the RISE provision in the proposal. This new package would increase that 50 percent to 100 percent, but would sunset in five years. It is our understanding that the expensing rate would need to be renewed or the rate would revert to the original 50 percent. Other industries without such a percent allowance would return to the regular straight-line expensing protocol. Of course, this proposal is far from complete. The House must now take the measure up in the Ways and Means Committee before going to the Floor for passage. Then, the Senate must do the same.

Any differences between the House and Senate plans must be ironed out before being sent to the president for his signature. We expect there to be many changes to the tax package over the next few weeks and possibly months. The president has indicated that he wants to sign such a tax bill by Thanksgiving but that appears to be a herculean task given the few remaining session days in Congress before their next recess. We will have more information on the tax bills shortly.

For more information on the tax provisions, please contact Billy Johnson.

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