WIPP Government Affairs
GOP Releases Tax Reform Proposal: What’s in it for you?
Congress has finally taken the long-awaited steps toward implementing tax reform. GOP leaders released their framework for tax reform in a proposal entitled, “Unified Framework for Fixing Our Broken Tax Code.” Provisions pertinent for small business in the plan include:
- Limits the maximum rate applied to pass-through entities to 25% (currently 39.6%)
- Reduces the corporate rate to 20% (currently 35%)
- Consolidates the seven individual tax brackets to three: 12%, 25%, and 35%
- Allows room for Congress to add a fourth bracket for high income earners
- Repeals the Estate Tax
- Repeals the Alternative Minimum Tax (AMT)
- Eliminates taxes on the first $24,000 of income earned by a married couple and the first $12,000 of income earned by a single individual (currently $12,700 for married filers and $6,350 for single filers)
- Eliminates the standard deduction and personal exemption for filers
- Allows businesses to expense the cost of new investments in depreciable assets for five years
- Partially limits the deduction for net interest expense incurred by C corporations
- Eliminates some itemized deductions (but does not specify which provisions)
- Eliminates § 199 manufacturing deduction
- Retains tax benefits for retirement security (401K, IRA)
- Implements territorial tax system
House Ways and Means Committee Chair Kevin Brady (R-TX) attended the WIPP Annual Leadership Meeting Luncheon to talk about the plan and to answer questions from members.
Finalizing the Budget: Why Does It Matter?
If both the House and the Senate do not pass an FY2018 Budget, the GOP tax reform framework cannot pass in its current form. Congress hopes to pass tax reform though reconciliation, a process that allows the Senate to pass budget-related legislation with a simple 51 majority vote, instead of the 60 votes typically required. The GOP has a 52-48 majority in the Senate. If the budget resolutions do not pass, the tax reform package negotiated by the Administration and GOP Congressional leaders would require at least eight Democratic votes.
Last week, the House passed their FY2018 Budget Resolution, H. Con. Res. 71, which contains reconciliation language that directs the House Ways and Means Committee to begin drafting tax reform legislation. The House resolution provides $300 billion over 10 years to pay for tax reform. The Senate Budget Committee also passed their FY2018 Budget Resolution. The Senate resolution contains reconciliation language that provides the Senate Finance Committee with $1.5 trillion over 10 years for tax reform.
The bill will be taken up by the Senate when they return from recess next week.
SBA Issues Notice of WOSB NAICS Changes
SBA is responsible for implementing and administering the Woman-Owned Small Business (WOSB) Program. The WOSB Program authorizes federal contracting officers to restrict competition for an acquisition to WOSBs, provided that appropriate conditions are met. In order to identify the industries eligible for set-asides under the WOSB Program, the SBA administrator has to conduct a study every five years to identify which industries WOSBs are underrepresented in in the Federal marketplace. As a result of the 2014 study findings, SBA increased the number of NAICS codes authorized for use under the WOSB Program to 113 four-digit NAICS industry groups, effective March 3, 2016. Consequently, WOSBs have been able to compete for and receive contract awards in 92 four-digit NAICS industry groups or 365 six-digit NAICS codes. EDWOSBs have been able to compete for and receive contract awards in 21 designated four-digit NAICS industry groups or 80 six-digit NAICS codes, in addition to those authorized for WOSBs.
On August 8, 2016, OMB published its most recent update to the NAICS industry groups, NAICS 2017, “Notice of NAICS 2017 final decisions.” These went into effect on January 1, 2017. In order to align the WOSB Program with the Notice of NAICS 2017 final decisions and SBA’s adoption of NAICS 2017 for its size standards, SBA is issuing this notice to amend the NAICS codes eligible for use under the WOSB Program.
Changes to WOSB NAICS
- 2012 NAICS codes 333911 and 333913 à 2017 NAICS code 333914 [Due to merges from the four digit codes]
- 333911: Pump and Pumping Equipment Manufacturing à 333914 Measuring, Dispensing, and Other Pumping Equipment Manufacturing
- Measuring and Dispensing Pump à Measuring, Dispensing, and Other
- 333913: Manufacturing à 333914 Pumping Equipment Manufacturing
- 2012 NAICS codes 512210 and 512220 à 2017 NAICS code 512250 [Merged Industries]
- 512210 Record Production à 512250 Record Production and Distribution
- 512220 Integrated Record Production/Distribution à 512250 Record Production and Distribution
- 2012 NAICS code 517110 à 2017 NAICS code 517311
- 517110 Wired Telecommunications Carriers à 517311 Wired Telecommunications Carriers
- 2012 NAICS code 517210 à 2017 NAICS code 517312 [Changed without changing definitions or titles]
- 517210 Wired Telecommunications Carriers (Except Satellite) à 517312 Wired Telecommunications Carriers (Except Satellite)
- 2012 NAICS code 541711 will correspond to 2017 NAICS codes 541713 and 541714 [New industries were created by splitting two industries into two parts with one part of each industry defined as a separate industry and combining other parts of the two industries to form a separate new industry]
- 541711 Research and Development in Biotechnology will correspond to 541713 Research and Development in Nanotechnology and 541714 Research and Development in Biotechnology (except Nanotechnology)
- 2012 NAICS code 541712 will correspond to 2017 NAICS codes 541713 and 541715
- Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology) will correspond to 541713 Research and Development in Nanotechnology and 541715 Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)