Today, the “Big Six” administration and congressional leaders -- Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, House Speaker Paul Ryan (R-WI), Senate Majority Leader Mitch McConnell (R-KY), House Ways and Means Chair Kevin Brady (R-TX), and Senate Finance Committee Chair Orrin Hatch (R-UT) -- released their “Unified Framework for Fixing Our Broken Tax Code.” This framework provides more details on the tax reform plan they have been developing over the past several months.

It is not clear yet how much progress this frameworks represents, however. It remains very high level and touches mainly on areas in which there was generally agreement before. While the framework provides some detail on pay-fors, many of the toughest decisions are left unaddressed to be resolved in the committee process. In addition, Finance Chairman Hatch’s long-contemplated proposal to integrate the corporate double tax is not specifically included, though the framework contemplates that it could be included during the committee process. While this document is a welcome development, it is just the start of a long and contentious process.

The following is a summary of the proposal as well as a comparison to recent past proposals.

Specific Provisions:

  • Business:

    • Corporate rate: 20% (reduced from current 35%)
    • Passthrough rate: business income limited to top rate of 25% (with measures to prevent wealthy individuals from converting personal income into business income)
    • New investment (other than structures) after September 27, 2017 eligible for immediate expensing for at least five years
    • R&D credit and low income housing tax credit (LIHTC) preserved
    • Corporate AMT repealed
    • International:
      • Move to territorial system with 100% exemption for dividends from foreign subsidiaries
      • Mandatory tax on previously untaxed foreign earnings at unspecified bifurcated rate; paid over several years
    • Pay-fors:
      • Partial limitation on net interest expense for C corporations (tax writing committees to consider treatment for non-corporate taxpayers)
      • Section 199 domestic production deduction repealed
      • “Numerous other special exclusions and deductions” repealed or limited
      • Unspecified global minimum tax
      • Other base erosion measures and "rules to level the playing field between US-headquartered parent companies and foreign-headquartered parent companies"
  • Individual:
    • Reduces the current number of tax brackets from seven to three (12%, 25%, and 35%)
      • Top rate reduced to 35% (from current 39.6%); additional top rate possible
      • Lowest rate raised to 12% (from current 10%)
    • Standard deduction doubled
    • Enhanced child tax credit
    • AMT, estate, and generation-skipping transfer taxes repealed
    • Pay-fors
      • Most itemized deductions repealed but deductions for home mortgage interest and charitable contributions retained; other tax benefits that “encourage work, higher education and retirement security” also retained

Comparison of Business Provisions


Current System


President Trump

Camp Proposal

Unified Framework

Tax rates

35% corporate

20% corporate

15% business

25% corporate

20% corporate

Pass-through tax rates

Taxed at individual owners’ rates


15% business

Taxed at individual owners’ rates; maximum rate of 25% on domestic manufacturing income

25% (with unspecified anti-avoidance measures)

Capital gains/dividends tax rates

0%/15%/20% on capital gains and qualified dividends, plus 3.8% net investment income tax for highest earners

50% deduction for capital gains, dividends, and interest income; repeal net investment income tax

Repeal net investment income tax

40% deduction of adjusted net capital gain

Cost recovery of capital investments

Depreciation deductions over time

100% expensing

Extends cost recovery periods; maximum $250K on expensing of business property (reduced as total investment exceeds $800K)

New investment eligible for full expensing for at least five years

Interest expense


Disallow deduction for net interest expense

Limits interest deduction of US corporate shareholder of a controlled foreign corporation (CFC) that is part of the same worldwide affiliated group

Net interest expense deduction limited for C corporations. Tax writing committees to decide treatment for non-corporate entities

Deductions and credits

Numerous deductions and credits

Eliminate all except R&D credit

“Eliminate tax breaks for special interests”

Eliminate most deductions and credits; make alternative simplified R&D credit permanent

Domestic production deduction (section 199) repealed; other unspecified tax benefits also repealed

R&D credit, LIHTC retained

Net operating losses (NOLs)

NOLs carried back two years and forward 20 years

NOLs carried forward indefinitely with interest factor, limited to 90% of net taxable amount; no NOL carrybacks

NOLs limited to 90% of taxable income; repeals special carryback rules

International operations

Tax worldwide profits (tax deferred on active foreign earnings until repatriated to US)

Tax only US sales, services, and intangibles (based on destination); 100% exemption for dividends

Territorial tax system

95% exemption for dividends from 10% subsidiaries

Territorial system with 100% dividends exemption; global minimum tax; other unspecified base erosion measures


Included in corporate tax base if company is subject to US tax

Border adjustments: Imports are taxed; exports are exempt

No border adjustments (previously announced in July joint statement)

Deemed repatriation

No current provision (voluntary holiday in 2004)

Mandatory tax on previously untaxed foreign earnings – 8.75% cash; 3.5% other assets – payable over eight years

“One-time tax on trillions of dollars held overseas”

Mandatory tax on previously untaxed foreign earnings – 8.75% cash; 3.5% other assets, less proportional foreign tax credit – payable over eight years

Mandatory tax on previously untaxed foreign earnings at unspecified bifurcated rate