Late yesterday afternoon, the Senate Finance Committee released their legislative response the House’s approved tax reform plan. The Char-O has a rundown and reaction here.
The main provisions of the plan include:
- Elimination of the corporate income tax by 2017
- Reducing the personal income tax to a flat rate of 5.25% by 2015, while providing a zero bracket on the first $15K for married filers and $7,500 for singles
- Eliminates almost all personal income tax credits and deductions – maintains the child tax credit and would include Social Security income to the extent it is included in the federal adjusted gross income
- Eliminates the franchise tax by 2018 and replaces with a “business privilege tax”
- Eliminates current state and local privilege taxes
- New business privilege tax will be extended to corporations and businesses organized as S-corps and LLC’s; will be a flat rate of $750 for LLC’s, S-corps and $5k for corporations
- Eliminates many exemptions and special sales tax rates – bringing them in line with the standard state tax rate
- Eliminates the local sales tax on food by Nov. 2016, offers local governments the option of bringing the local food tax back in Jan. 2017 if they so choose
- Does not broadly expand the sales tax base to goods and services not currently taxed – as outlined in the original Senate tax reform plan
- Eliminates the state death tax
- Projected to reduce taxes by a combined $684 million over the next biennium compared to the revenue the current tax code is projected to generate
For the full text of the legislation, click here.
Click here for a comparison between the House plan and the new Senate plan.
Click here for fiscal impact of the new Senate plan.
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