The Republican tax plan has officially been unveiled, and it includes a permanent corporate tax rate cut from 35% to 20%. The $1.5 trillion plan also includes the shrinking of the number of tax brackets to just four and eliminates the alternative minimum tax. It does not change the pretax treatment of 401K plans, as had been discussed previously.
According to the New York Times, businesses would see nearly $1 trillion in net cuts and the plan would reduce federal revenues by about $1.5 trillion over 10 years. The individual tax brackets would be 12, 25 and 35% for those making under $1 million and 39.6% for those over one million.
“With this plan, we are making pro-growth reforms, so that yes, America can compete with the rest of the world,” said Speaker Paul D. Ryan of Wisconsin.
The plan includes limits on mortgage interest deduction and caps on state and local tax deductions. It nearly doubles the standard deductions for individuals and married couples filing jointly. It repeals the so-called “death tax” after six years.
The Washington Post reports that the plan does not change how income on investments is taxes, but other factors in the plan could change how much individuals pay.
Corporate taxes would see a 20% rate, but whether individual companies pay more or less than they do now remains to be seen. The bill still needs to be marked up by the House Ways and Means Committee – that is expected on Monday – and how many deductions are eliminated will determine the ultimate bill.
The Congressional Budget Office said that U.S. corporations paid an overall effective tax rate of 18.6% in 2012, which remained fairly steady from 2002 to 2012. It noted, however, that retail businesses paid much higher rates with some near 30%, and energy companies tending to pay low amounts due to special depreciation rates, with the average utilizes, gas and electric sector company paying only 3.1% from 2008 to 2015.
The other big concern for many in trucking is the “pass-through” rate. A pass-through company allows businesses to funnel income into the owner’s individual income tax to take advantage of lower rates. According to the Brookings Institution, 95% of U.S. businesses are set up as pass-through companies. Under the Republican plan, 70% of the income would be taxed at the individual owner’s rate with the remaining 30% taxed at a 25% rate.
Did you know?
According to FTR, Class 8 net truck orders in September increased 62% compared to August and 167% over September 2016. The firm said orders totaled 35,700 units for the month.
“Class 8 orders surged in October. The market seems well situated for a strong production environment to persist into 2018. FTR has been anticipating a strong 2017 fall order season since early this year. The market continues to follow our expectations and highlights that the market fundamentals remain solid as we approach 2018.”
– Jonathan Starks, COO, FTR
In other news:
Ryder teams with Geotab for ELD platform
Ryder System will provide rental customers with an ELD platform through a partnership with Geotab. Customers will still be able to use their own device if they choose, Ryder said. (Transport Topics)
Clean truck inspections continue to grow
The rate of violation-free truck inspections continues to rise, reaching nearly 46% in 2016, according to CVSA data. (Overdrive)
FedEx expects 400 million packages this holiday season
FedEx said it is anticipating nearly 400 million packages will move through its system this holiday season, a 26% increase over two years ago. (Transport Topics)
Mitsubishi Fuso aims for 5-minute electric truck charging
Mitsubishi Fuso said it plans to develop an electric truck that can be fully charged in five minutes by 2021. (Nikkei Asian Review)
Administration updating autonomous vehicle framework
Just one month after introducing its framework for autonomous vehicles, the Trump Administration is now updating the policy to address technology advances. (The Hill)
There will be a lot of stories written in the days ahead about the Republican tax plan. More specific details are still to be worked out by the Ways and Means Committee and the Senate will produce its own version. For now, it’s really wait-and-see time before the final bill is drafted and how likely it will be to pass.
Hammer down everyone!
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