HOUSTON, Nov. 6, 2017 /PRNewswire/ — After months of laying the groundwork for comprehensive tax reform legislation, House Ways and Means Committee Chairman Kevin Brady (R-TX) introduced the Tax Cuts and Jobs Act late last week. While there is sure to be intense negotiations and many modifications made to the bill as it is considered in the House and Senate, the bill as it stands represents a major attempt by congressional Republicans to overhaul the tax code. If signed into law, the legislation would be the most sweeping tax reform the nation has seen in over three decades.

The bill, which was co-sponsored by Speaker of the House Paul Ryan (R-WI), would implement a series of policy changes intended to spark economic growth, support middle-class families, create jobs, simplify the tax code, and level the playing field for American workers and small businesses. The legislation also seeks to remove incentives to send jobs and capital overseas.

The highlights of the legislation include major reductions in individual, business and corporate tax rates as well as the removal of much of the complexity throughout the tax code. On the individual side, the current seven tax brackets would be collapsed into brackets of zero, 12 percent, 25 percent and 35 percent for the purpose of lowering individual rates on low- and middle-income Americans. Additionally, the bill would maintain the 39.6 percent rate on high income Americans.

In an effort to offer further tax relief for individuals and families, the plan would significantly increase the standard deduction from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for joint filers. The bill expands the Child Tax Credit and preserves the Child and Dependent Care Tax Credit as well as the Earned Income Tax Credit. The legislation would also repeal the individual alternative minimum tax (AMT).

On the business side, the bill slashes the corporate tax rate to 20 percent and reduces the tax rate on small and family-owned businesses to no more than 25 percent. The latter change goes hand-in-hand with safeguard provisions to distinguish between individual wage and “pass-through” business income to ensure the rate reduction is only providing relief to the businesses it was designed to benefit.

To offset the rate reductions, the bill calls for the removal of a number of business credits and incentives. The plan does however preserve the Research and Development (R&D) Tax Credit and the credit could potentially be strengthened for domestic manufacturers through separate legislation proposed by Senators Chris Coons (D-DE) and Pat Roberts (R-KS). If implemented into law, the Invent and Manufacture in America Act would phase in an increase to the R&D Tax Credit by up to 25 percent for companies that perform the majority of their manufacturing in the United States.

With respect to international tax, the bill would move away from a “worldwide” tax system and eliminate incentives that reward companies for shifting jobs, profits and manufacturing facilities overseas.

“I applaud our elected officials for looking for solutions that will strengthen U.S. businesses and expand economic opportunities for all Americans,” said Dhaval Jadav, alliantgroup CEO. “I’m especially heartened to see that the bill keeps in place the R&D Tax Credit. We have seen first-hand at alliantgroup how critical the R&D Tax Credit has been in helping businesses grow, create jobs and remain competitive and innovative.”

“This legislation contains a number of commonsense reforms that would benefit American workers and U.S. businesses,” said Dean Zerbe, alliantgroup National Managing Director and the former Senior Counsel to the U.S. Senate Finance Committee. “I commend Chairman Brady for seeking solutions that will encourage economic growth and offer tax relief to the middle class and American workers.”

alliantgroup is a leading tax consultancy and the nation’s premier provider of specialty tax services. The firm assists U.S. businesses and their CPA advisors in properly identifying and claiming all federal and state tax incentives that were designed for their benefit. These incentive programs were created to help American businesses grow and remain competitive in an increasingly global economy. To date, alliantgroup has helped 12,000 U.S. businesses claim over $6 billion in tax savings. For more information on alliantgroup, please follow us on LinkedIn, Facebook and Twitter.