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Catherine Treadwell Perry, J.D., Director of Government Relations
|Legislative Update in the 'Lame Duck'
The ASA Advocacy Team was busy this week attending coalition meetings, in particular, the Family Business Coalition. This meeting had updates on the Death Tax, a Senate Legislative update, Senate Finance Committee update, and House tax update.
The big update for the Death Tax was a list of proposed estate tax plans by Democratic primary contenders. As of now, the Tax Cut and Jobs Act (TCJA) has an exception of $11.4 million indexed to inflation, the base tax rate is 40%, there are no additional tax rates nor surtax, and the top tax rate is 40%. However, under the Senate Democratic Infrastructure Plan, the exception is only at $5 million, base tax rate at 40%. The good news is that there are no additional tax rates or surtax and the top tax rate would remain at 40%, if passed. Under Senator Sanders proposed plan, the exception is at $3.5 million, the base tax rate would be 45%. This is where it gets super ugly, the additional tax rates would be 50% on estates over $10 million and 55% on estates over $50 million. That’s not all, the surtax would be 10% on estates over $500,000 and a top tax rate of 65%. It keeps getting worse from here,
Senator Booker’s proposed plan would have the exception at $3.5 million and the base tax rate at 45%, there would be no additional tax rates, but the surtax would be 10% on estates over $10 million and 20% on estates over $50 million and the top tax rate would be 65%.
Senator Warren’s proposed plan would put the exception at $3.5 million, but base tax rate at 55%. The additional tax rates would be 60% on estates over $13 million and 65% on estates over $93 million. The surtax would come in at 10% on estates over $1 billion and the top tax rate coming in at 75%.
Currently there are 35 co-sponsors for a bill reintroducing the Death Tax Repeal Act and a possibility that the coalition will be writing a letter to Congress about the issue. ASA Advocacy Team will continue to monitor this issue and will update you with any further developments.
The Senate legislative update is more nomination focuses right now. However, there is disaster relief piece of legislation that is getting a lot of attention in the “lame duck,” which is likely to move.
The Senate Finance Committee is eyeing a tax bill dropped by the House last week. This bill was part of the Tax 2.0 and includes tax extenders, technical corrections, retirement savings, and a miscellaneous area. The bull would extend a number of tax provisions that would expired in 2017. The list includes provisions related to alternative fuels, private mortgage insurance, and the provisions related to biodiesel would be extended until 2021.
The technical corrections would clarify that qualified improvement property can be immediately deducted and clarifies an issue with the net operating issues in the Tax Cut and Jobs Act.
The retirement portion includes several changes to the administration t retirement accounts and how they relate to small employers. Additionally, individuals could now be able to withdraw up to $7,500 without a penalty from retirement accounts for the adoption of a child and it would allow individuals to contribute to IRA’s past the age of 70.5.
This bill would also allow startup businesses to deduct up to $20,000 in startup expenses. There is also a piece that would allow disaster relief to individuals impacted by a natural disaster in 2018.
The House Committee on Ways and Means were busy with the above mentioned bills last week. However, they also were busy working on IRS reform. They also are working on estate and gift tax limits. The IRS announced that the official estate and gift tax limits for 2019. The estate and gift tax exception is set at $11.4 per an individual and the annual gift tax exclusion will remain the same at $15,000. These exceptions are set to expire at the end of 2025.
As always, the ASA Advocacy Team is your voice in D.C. We will continue to monitor all of these issues and keep you updated. If you have any questions or concerns, please contact Catherine Treadwell Perry at email@example.com.
- President Donald Trump, along with Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto, signed a new North American trade deal at the Group of 20 summit in Argentina, which will likely take much of 2019 to be ratified by lawmakers in all three nations.. The agreement, among other measures, requires that 75 percent, up from 62.5 percent, of duty-free vehicles be made in North America, and it requires a large portion of manufacturing to be performed by workers earning at least $16 an hour, a measure designed to prevent automakers from shifting work to lower-cost Mexican factories. (The Washington Post)
- President Donald Trump and Chinese President Xi Jinping agreed to delay new or higher tariffs for 90 days while the two countries negotiate on trade, and China also pledged to buy more American products, according to the White House. The meeting at the Group of 20 summit in Argentina was the first time the two presidents had met in person since the trade war began.
- The Trump administration released four templates detailing its plans to allow states to waive parts of the Affordable Care Act and restructure their premium subsidies, opening the door for consumers to use those subsidies to purchase cheaper plans outside of the ACA exchange that may not offer the full range of benefits required by the law. The new guidance is intended to give states freedom to move away from the ACA, according to Centers for Medicare and Medicaid Services Seema Azar, but could face legal challenges ahead. (The Wall Street Journal)
- Trump canceled a planned Saturday meeting with Russian President Vladimir Putin at the Group of 20 summit in Argentina amid renewed aggression by Russia against Ukraine. Trump is still slated to meet with the leaders of Argentina, South Korea, Japan, Germany and India along with his marquee meeting with Chinese President Xi Jinping. (NPR News)
- The Senate voted along party lines 50-49 to advance Trump's controversial pick of Kathy Kraninger, an associate director at the Office of Management and Budget, as head of the Consumer Financial Protection Bureau, where OMB Director Mick Mulvaney has served as acting chief for about a year. Kraninger will head to a final confirmation vote next week. (The Hill)
- House Democrats voted 203-32 to make Rep. Nancy Pelosi of California their nominee for speaker next Congress, leaving her short of the 218 votes she'll need on House floor in January to win the job with her party's support alone. Democrats also selected Rep. Steny Hoyer of Maryland to be the next majority leader and Rep. James Clyburn of South Carolina to serve as the party whip, while New York Rep. Hakeem Jeffries will serve as caucus chairman after defeating California Rep. Barbara Lee in a 123-113 vote. (The New York Times)
- An interest rate hike is likely in December, but Federal Reserve officials are being more cautious about maintaining a quarterly pace after that, according to recently released minutes of a Nov. 7-8 meeting. The officials also discussed factors, including trade, that could slow the economy more than the Fed expected at the beginning of 2018. (The Wall Street Journal)
- Federal Deposit Insurance Corp. Chairman Jelena McWilliams said her agency and the Federal Reserve are looking for ways to simplify requirements for submitting "living will" plans, a Dodd-Frank requirement for U.S. banks that outline a plan to wind themselves down in a crisis without a taxpayer-funded bailout. The FDIC is also considering suspending the living will process for depository institutions until the new rules are in place, McWilliams added. (The Wall Street Journal)
- The Internal Revenue Service issued new guidance that could allow corporations to lower their tax hit by requiring them to allocate only half, compared to all, of certain domestic expenses to foreign subsidiaries when calculating how much they owe on their global intangible low-tax income. The U.S. Chamber of Commerce and other business groups previously argued that companies should not have to allocate any of these expenses. (Bloomberg)
- The Environmental Protection Agency is considering applications of exemptions from federal biofuel blending requirements from 15 small oil refineries, three sources said, despite pushback from ethanol advocates, who have asked the EPA to stop issuing the waivers. The agency is expected to "reset" the biofuel program, an overhaul that could ultimately change the waiver process and reduce annual blending quotas under the Renewable Fuel Standard. (Bloomberg)
Expect a deal between U.S. President Donald Trump and his Chinese counterpart Xi Jinping at the G-20 summit in Argentina, but manage your expectations, a Wells Fargo executive told CNBC recently.
The Wall Street Journal
House Republicans are struggling to advance their year-end tax bill, with just a few legislative days to go until they relinquish the majority to the Democrats.
The Associated Press
Sent off with a 21-gun salute, George H.W. Bush left his beloved Texas for the final time Monday, headed to Washington as the nation paid tribute to the 41st president for a lifetime of public service that began in the Navy during World War II, ended with four years as president and was characterized throughout by what admirers say was decency, generosity and kindness.
A long motorcade accompanied the hearse carrying Bush’s remains from a Houston funeral home to nearby Ellington Field for the trip to the nation’s capital on an aircraft that often serves as Air Force One. Military artillery fired the salute, and servicemen carried the casket to the plane.
For decades, the most critical early stages of a presidential campaign unfolded largely out of public view, with candidates quietly courting financiers, party bosses and interest groups influential in the nominating process.
But two years after President Donald Trump proved a candidate could flout traditional power structures and succeed — and with the 2020 campaign now picking up — the reign of the “invisible primary” is in decline.
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