On September 26, 2017, the Trump administration, the House Committee on Ways and Means, and the Senate Finance Committee released their nine-page "Unified Framework for Fixing Our Broken Tax Code," along with a one-page overview of the framework. The framework is intended to serve as a template for the tax-writing committees as they develop legislation in a transparent fashion. The document cites pro-American and fiscally responsible tax reform as the primary objective, and aims to achieve that goal by broadening the tax base, closing loopholes, and growing the economy.
On the business side, the framework lowers the corporate tax rate to 20% and eliminates the corporate alternative minimum tax. A maximum tax rate of 25% will be applied to sole proprietorships, partnerships, and S corporations (and measures will be taken to limit abuse of the rate by wealthy individuals). The framework calls for immediate full expensing of the cost of new investments in depreciable assets for five years, excluding structures. The deduction for net interest expense will be partially limited. Section 199 (the manufacturer's deduction) will be repealed, but research and development and low-income housing credits would be maintained.
The framework outlines a move to a territorial tax model, including a one-time repatriation rate. There will be a lower rate for foreign earnings held in illiquid assets than for earnings held in cash or cash equivalents.
The framework provides a base for the tax-writing committees to build upon, including filling in details like the structure and extent of the net interest deduction limitation, the repatriation rates, and the preservation or elimination of other business deductions. The Senate Finance and House Ways and Means committees are expected to begin the committee legislative process as soon as next month.