Highlights of President’s Tax Reform Framework

Published by Michael Novogradac on Wednesday, February 22, 2012 - 12:00am

Here are some highlights from the the President’s just released tax reform framework:

Reduce the corporate tax rate from 35 percent to 28 percent

Eliminate dozens of business tax loopholes and tax expenditures

  • LIFO Accounting
  • Oil & Gas Preferences
  • Insurance Industry Products
  • Tax Carried Interests Income as Ordinary Income
  • Special Depreciation for Corporate Aircraft

Reform Corporate Tax Base

  • Address Accelerated Depreciation
  • Reduce Bias to Debt Financing
    • Include reducing deductibility of interest
  • Establish Greater Income Tax Parity Between Large C Corps & Large Pass-Throughs
  • Reduce Gap Between Book and Tax Income

For Manufacturing:

  • Reduce top rate to 25%
  • Expand, simplify and make permanent the R&E Tax Credit.
  • Extend, consolidate, and enhance key tax incentives to encourage investment in clean energy

Framework also has International Provisions and Small Business Provisions.

For Small Businesses:

  • Expense up to $1 million in investments
  • Expand cash accounting ($10 million gross receipts cap)
  • Double deduction for start-up expenses ($5,000 to $10,000)
  • Reform/Expand Health Insurance Tax Credit

No specific mention of low-income housing, new markets or historic tax credits.  Renewable energy addressed in section on extending, consolidating and enhancing clean energy incentives.