On Wednesday afternoon, top officials in the Trump Administration released their proposal for comprehensive tax reform, calling it the “biggest tax cut in U.S. history.” The plan is designed to serve as the starting point as Congress and the Administration work to pass a comprehensive tax reform package this year.
Specifically, the proposal looks to cut taxes and simplify the tax code by reducing the current seven tax brackets used today to only three brackets: a 10% bracket, a 25% bracket and a 35% bracket.
Gary Cohn, director of the National Economic Council, said the proposal will also repeal the estate tax — commonly referred to as the death tax. “The threat of being hit by the death tax leaves small business owners and farmers in this country to waste countless hours and resources on complicated estate planning to make sure their children aren't hit with a huge tax when they die. No one wants to see their children have to sell the family business to pay an unfair tax,” Cohn said in a briefing detailing the proposal.
Cohn noted that, unlike previous proposals that set a phase-out date for the estate tax, this proposal would “phase out the death tax immediately” when the proposal becomes effective.
Eliminating the estate tax has been a top priority for many agricultural groups, including the National Cattlemen's Beef Assn. (NCBA). Danielle Beck, NCBA director of government affairs, said it has a been a priority for cattle producers for decades.
“Since the death tax was implemented nearly a century ago, it has not only failed to meet the misguided goals set by Congress but has threatened the existence of many multigenerational farms and ranches,” Beck said. “The death tax is clearly on the Administration's radar, and for that, we are appreciative. NCBA will assist the Administration however we can as they work to put together a comprehensive tax reform package.”
The BUILD Coalition - Businesses United for Interest & Loan Deductibility — is a group of businesses and trade associations representing multiple sectors of the U.S. economy, including real estate, telecommunications, manufacturing, agriculture, finance and small business. It is committed to maintaining the full deduction for business interest expenses in the tax code.
The BUILD Coalition said it was encouraged by the principles the White House released for tax reform and strongly urged Congress to follow a similar path in its efforts. In a recent hearing on tax reform, House Agriculture Committee chairman Michael Conaway (R., Texas) recognized that managing cash flow is paramount for farmers.
The House Republican blueprint proposes replacing interest deduction with full and immediate expensing. As many members suggested during the hearing, doing away with the interest deduction would create new hardships for farmers.
“By prioritizing stronger business investment and economic growth, supported by full interest deductibility for businesses in the tax code, the Administration can make good on its promise to promote pro-growth policies that allow American businesses of all sizes to continue competing and growing in a competitive global environment," a statement from the BUILD Coalition stated.
Treasury Secretary Steven Mnuchin said there is a lot of work going on with the House and Senate to turn the proposal into a bill that can be passed in Congress and signed by the President.
The tax reform proposal comes on the heels of an executive order President Donald Trump signed yesterday on promoting agriculture and rural prosperity in America.
The executive order establishes an Interagency Task Force on Agriculture & Rural Policy and contains specific policy goals aimed at supporting rural agriculture, economic development, job growth and infrastructure improvement. According to the order, this includes: “Promoting the preservation of farms and agribusinesses as they are passed from one generation to the next, including changes to the estate tax and the tax valuation of family or cooperatively held businesses.”