A sweeping amendment from the chairman of the House tax writing committee transformed key provisions of the GOP tax overhaul bill to boost the rate applied to companies’ offshore cash, tweak rules for pass-through businesses and restore the adoption credit, ahead of a full House vote that’s expected next week.
The last-minute rewrite shows just what a difficult balance House Ways and Means Chairman Kevin Brady and House Speaker Paul Ryan have to strike to incorporate demands from lawmakers and lobbyists, without blowing past the deficit limit of $1.5 trillion.
Here’s an overview of some of the changes:
The new version restores the adoption credit.
Originally, the House bill eliminated the credit, which is currently worth as much as $13,750 per eligible child.
The amendment offers several important provisions that it says would make it easier for smaller businesses to succeed and grow. The changes include providing a new tax rate of 9 percent for businesses earning less than $75,000 in income. The benefit is phased out as taxable income exceeds $150,000 and fully phased out at $225,000.
The earlier version would have would have limited access to the new 25 percent tax rate; business owners would have qualified for it just 30 percent of their income; the remaining 70 percent would be treated as wages. Or they could use a formula based on their level of capital investment to determine how much income would get the new rate.
The amendment would boost proposed rates on trillions of dollars of U.S. companies’ overseas income to 14 percent on income held as cash and 7 percent on non-cash holdings.
The bill that Brady released a week ago proposed rates of 12 percent and 5 percent for companies’ offshore cash piles.