2022: Fitzpatrick Voted Against Establishing A 15% Alternative Minimum
Tax For Corporations With A Minimum Income Of $1 Billion Over A 3-Year
Period. In August 2022, according to the Congressional Research
Service, Fitzpatrick voted against concurring in the Senate amendment to
the Inflation Reduction Act of 2022, which "imposes an alternative
minimum tax of 15% of the average annual adjusted financial statement
income of domestic corporations (excluding Subchapter S corporations,
regulated investment companies, and real estate investment trusts) that
exceeds $1 billion over a specified 3-year period. The tax is effective
in taxable years beginning after December 31, 2022." The vote was on a
motion to concur. The House concurred with the Senate by a vote 220-207,
thus the bill was sent to President Biden for final signage. President
Biden signed the bill and it ultimately became law. [House Vote 420,
8/12/22; Congressional
Research Service,
8/7/22;
Congressional Actions, H.R.
5376]
To Offset Costs Of The Spending Included In The Inflation
Reduction Act, The Bill Established A New Corporate Tax On Certain
Large Corporations That Currently Do Not Pay Federal Taxes.
According to The Washington Post, "To pay for the spending,
Democrats included a new tax on a set of large companies that
currently pay nothing to the U.S. government, and added about $80
billion for the IRS to pursue those who dodge what they owe." [The
Washington Post,
8/7/22]
To Retain Senator Kyrsten Sinema's (D) Support, The Amended Bill
Exempted Private Equity And The Companies In Their Portfolios From
The Alternative Minimum Tax. According to The Washington Post, "On
Sunday, the senator intervened again, this time in a way that
benefited private equity and the companies in their portfolios. That
forced Democrats to rethink their minimum tax --- and essentially
carve out the industry --- to retain her support." [The Washington
Post,
8/7/22]
To Retain Senator Kyrsten Sinema's (D) Support, Democrats Had To
Remove A Provision That Would Have "Narrowed The Carried Interest
Tax Loophole" And Generated $14 Billion In Additional Revenue.
According to NPR, "A portion that got cut, though, is one that
narrowed the carried interest tax loophole. Arizona Kyrsten Sinema
agreed to sign onto the bill if this measure, which would have
changed the way private equity income is taxed, was cut. Democrats
said it would have brought in $14 billion in revenue." [NPR,
8/7/22]
The Minimum Tax Was Proposed To Prevent Large Corporations Earning
At Least $1 Billion From Paying Low Taxes But The Bill Offered
Several Exemptions. According to Congressional Quarterly, "The
minimum tax is aimed at preventing the largest corporations, those
earning at least $1 billion, from paying very low effective tax
rates." [Congressional Quarterly,
8/7/22]
The Bill Excluded Subchapter S Corporations, Regulated Investment
Companies And Real Estate Investment Trusts From The Alternative
Minimum Tax. According to the Congressional Research Service,
"This bill imposes an alternative minimum tax of 15% of the average
annual adjusted financial statement income of domestic corporations
(excluding Subchapter S corporations, regulated investment
companies, and real estate investment trusts) that exceeds $1
billion over a specified 3-year period. The tax is effective in
taxable years beginning after December 31, 2022." [Congressional
Research Service,
8/7/22]
The Bill Provided Tax Exemptions, Including For Purchases Of
Equipment, "Amortization Of Wireless Spectrum Assets," Contributions
To Pension Plans, And Net Operating Losses. According to
Congressional Quarterly, "The minimum tax is aimed at preventing the
largest corporations, those earning at least $1 billion, from
paying very low effective tax rates. But the final version still
offers a range of exemptions for purchases of machinery and other
equipment; amortization of wireless spectrum assets; pension plan
contributions; net operating losses;" [Congressional Quarterly,
8/7/22]
2017: Fitzpatrick Voted For The Final Version Of Trump's Tax Reform
Plan, Which Substantially Cut Taxes For Rich Americans And Corporations,
And Allowed Immediate Business Expensing. In December 2017,
Fitzpatrick voted for the Tax Cut and Jobs Act, also known as Trump's
tax reform bill. According to Congressional Quarterly, "This Conference
Summary deals with the conference report on HR 1, Tax Cuts and Jobs Act,
which the House will consider Tuesday. The agreement significantly cuts
corporate and individual taxes and seeks to simply the tax code,
although most individual tax provisions would expire after 2025. It
reduces the corporate tax from 35% to 21% and reduces taxation of
so-called 'pass-through' businesses where profits are taxed at the
individual rate. For corporate taxes it also establishes a 'territorial'
tax system that exempts most overseas income from U.S. taxation. Most
individual tax rate rates would be reduced, including by dropping the
top rate from 39.6% to 37%, and it eliminates personal exemptions but
nearly doubles the standard deduction so fewer taxpayers will itemize
deductions." The vote was on passage. The House passed the bill by a
vote of 227 to 203. The Senate later passed a slightly modified version
of the bill, which the House later agreed to. President Trump later
signed an amended version of the bill into law. [House Vote 692,
12/19/17; Congressional
Quarterly, 12/18/17;
Congressional Actions, H.R.
1]
2017: Fitzpatrick Voted For The House GOP's 2017 Tax Reform Plan Which
Significantly Cut Taxes For The Rich And Corporations And Altered
Business Expensing To Allow Full Immediate Expensing. In November
2017, Fitzpatrick voted for reconciliation legislation which
significantly altered the federal tax code. According to Congressional
Quarterly, "The bill substantially restructures the U.S. tax code to
simplify the code and reduce taxes on individuals, corporations and
small businesses. For individuals, it consolidates the current seven tax
brackets down to four and eliminates or restricts many tax credits and
deductions, including by eliminating the deduction for state and local
income taxes and limiting the deduction for property taxes to $10,000
and the interest deduction for a home mortgage to the first $500,000
worth of a loan. [...] On the business side, it reduces the corporate
tax from 35% to 20% and establishes a 'territorial' tax system that
would exempt most income derived overseas from U.S. corporate taxation.
It allows businesses to immediately expense 100% of the cost of assets
acquired and placed into service, and for small businesses it raises the
Section 179 expensing limit to $5 million for five years. It also
establishes a 25% rate for a portion of pass-through business income
that would otherwise have to be paid at the ordinary individual tax
level, and for small businesses where an individual would receive less
than $150,000 in pass-through income it taxes the first $75,000 of
that income at a 9% rate." The vote was on passage. The House passed the
bill by a vote of 227 to 205. President Trump later signed an amended
version of the bill into law. [House Vote 637,
11/16/17; Congressional
Quarterly, 11/15/17;
Congressional Actions, H.R.
1]
2017: Fitzpatrick Voted For The House GOP's 2017 Tax Reform Plan Which
Significantly Cut Taxes For The Rich And Corporations And Repealed The
Corporate Alternative Minimum Tax. In November 2017, Fitzpatrick voted
for reconciliation legislation which significantly altered the federal
tax code. According to Congressional Quarterly, "The bill substantially
restructures the U.S. tax code to simplify the code and reduce taxes on
individuals, corporations and small businesses. For individuals, it
consolidates the current seven tax brackets down to four and eliminates
or restricts many tax credits and deductions, including by eliminating
the deduction for state and local income taxes and limiting the
deduction for property taxes to $10,000 and the interest deduction for
a home mortgage to the first $500,000 worth of a loan. [...] On the
business side, it reduces the corporate tax from 35% to 20% and
establishes a 'territorial' tax system that would exempt most income
derived overseas from U.S. corporate taxation. It allows businesses to
immediately expense 100% of the cost of assets acquired and placed into
service, and for small businesses it raises the Section 179 expensing
limit to $5 million for five years. It also establishes a 25% rate for
a portion of pass-through business income that would otherwise have to
be paid at the ordinary individual tax level, and for small businesses
where an individual would receive less than $150,000 in pass-through
income it taxes the first $75,000 of that income at a 9% rate." The
vote was on passage. The House passed the bill by a vote of 227 to 205.
President Trump later signed an amended version of the bill into law.
[House Vote 637,
11/16/17; Congressional
Quarterly, 11/15/17;
Congressional Actions, H.R.
1]
2017: Fitzpatrick Voted For The Final Version Of Trump's Tax Reform
Plan, Which Substantially Cut Taxes For Rich Americans And
Corporations. In December 2017, Fitzpatrick voted for the Tax Cut and
Jobs Act, also known as Trump's tax reform bill. According to
Congressional Quarterly, "This Conference Summary deals with the
conference report on HR 1, Tax Cuts and Jobs Act, which the House will
consider Tuesday. The agreement significantly cuts corporate and
individual taxes and seeks to simply the tax code, although most
individual tax provisions would expire after 2025. It reduces the
corporate tax from 35% to 21% and reduces taxation of so-called
'pass-through' businesses where profits are taxed at the individual
rate. For corporate taxes it also establishes a 'territorial' tax system
that exempts most overseas income from U.S. taxation. Most individual
tax rate rates would be reduced, including by dropping the top rate from
39.6% to 37%, and it eliminates personal exemptions but nearly doubles
the standard deduction so fewer taxpayers will itemize deductions." The
vote was on passage. The House passed the bill by a vote of 227 to 203.
The Senate later passed a slightly modified version of the bill, which
the House later agreed to. President Trump later signed an amended
version of the bill into law. [House Vote 692,
12/19/17; Congressional
Quarterly, 12/18/17;
Congressional Actions, H.R.
1]
Bill Repealed The Corporate AMT. According to Bloomberg,
"Current law: Applies a 20 percent rate as part of a parallel tax
system that limits tax benefits to prevent large-scale tax
avoidance. Companies must calculate their ordinary tax and AMT tax,
and pay whichever is higher. Proposed: Repealed" [Bloomberg,
12/15/17]
Bill Lowers The Corporate Tax Rate From 35 Percent To 21
Percent. According to Congressional Quarterly, "It cuts the
corporate tax rate from 35% to 21%, allows businesses (excluding
public utilities and real estate-related businesses) to immediately
expense 100% of the cost of assets that are acquired and placed into
service by the business (up from 50% under current law), and repeals
the alternative minimum tax (AMT) for corporations." [Congressional
Quarterly, 12/18/17]
In 2027, 83 Percent Of The Total Tax Benefit Would Go To The Top
One Percent. According to Tax Policy Center, "In 2027, the overall
average tax cut would be $160, or 0.2 percent of after-tax income
(table 3), largely because almost all individual income tax
provisions would sunset after 2025. On average, taxes would be
little changed for taxpayers in the bottom 95 percent of the income
distribution. Taxpayers in the bottom two quintiles of the income
distribution would face an average tax increase of 0.1 percent of
after-tax income; taxpayers in the middle income quintile would see
no material change on average; and taxpayers in the 95th to 99th
income percentiles would receive an average tax cut of 0.2 percent
of after-tax income. Taxpayers in the top 1 percent of the income
distribution would receive an average tax cut of 0.9 percent of
after-tax income, accounting for 83 percent of the total benefit for
that year." [Tax Policy Center,
12/18/17]
In 2027, 86 Million Americans Would See A Tax Increase.
According to ABC News, "The bill, which carries an estimated $1.5
trillion price tag over 10 years, is not expected to win any
Democratic support. House Minority Leader Nancy Pelosi points to a
new analysis from the non-partisan Tax Policy Center that predicts
86 million people would see a tax increase compared to current law
by 2027, while 83 percent of the anticipated benefits would be
reaped by the wealthiest one percent of taxpayers." [ABC News,
12/19/17]
Most Of The Bill's Tax Cuts For Individuals Are Temporary, But The
Corporate Ones Are Permanent. According to the Washington Post,
"The core of the plan is a massive and permanent cut to the
corporate tax rate, dropping it from 35 percent to 21 percent. The
bill also would cut individual tax rates for all income tax levels.
Families earning less than $25,000 a year would receive an average
tax cut of $60, while those earning more than $733,000 would see
an average cut of $51,000, according to the nonpartisan Tax Policy
Center. Many of the breaks for individuals are set to expire in the
coming years. Republicans set those expiration dates to comply with
Senate limits on how much their legislation could add to the
nation's deficit, and they say a future Congress will extend the
cuts or make them permanent." [Washington Post,
12/20/17]
American Companies Used Earnings From Tax Cuts To Bolster Their
Share Prices. According to the New York Times, "American companies
spent more than $800 billion on their own shares last year, taking
a windfall from deep corporate tax cuts to try to bolster their
share prices and improve the look of their quarterly earnings
reports." [New York Times,
10/24/19]
2017: Fitzpatrick Voted For The House GOP's 2017 Tax Reform Plan Which
Significantly Cut Taxes For The Rich And Corporations, Such As Lowering
The Corporate Tax Rate From 35 Percent To 20 Percent. In November
2017, Fitzpatrick voted for reconciliation legislation which
significantly altered the federal tax code. According to Congressional
Quarterly, "The bill substantially restructures the U.S. tax code to
simplify the code and reduce taxes on individuals, corporations and
small businesses. For individuals, it consolidates the current seven tax
brackets down to four and eliminates or restricts many tax credits and
deductions, including by eliminating the deduction for state and local
income taxes and limiting the deduction for property taxes to $10,000
and the interest deduction for a home mortgage to the first $500,000
worth of a loan. [...] On the business side, it reduces the corporate
tax from 35% to 20% and establishes a 'territorial' tax system that
would exempt most income derived overseas from U.S. corporate taxation.
It allows businesses to immediately expense 100% of the cost of assets
acquired and placed into service, and for small businesses it raises the
Section 179 expensing limit to $5 million for five years. It also
establishes a 25% rate for a portion of pass-through business income
that would otherwise have to be paid at the ordinary individual tax
level, and for small businesses where an individual would receive less
than $150,000 in pass-through income it taxes the first $75,000 of
that income at a 9% rate." The vote was on passage. The House passed the
bill by a vote of 227 to 205. President Trump later signed an amended
version of the bill into law. [House Vote 637,
11/16/17; Congressional
Quarterly, 11/15/17;
Congressional Actions, H.R.
1]
2017: Fitzpatrick Voted Against The FY 2018 Republican Study Committee
Budget Resolution Which In Part Called For Lowering The Corporate Tax
Rate To 20 Percent At The Most. In October 2017, Fitzpatrick voted
against a budget resolution that would in part, according to
Congressional Quarterly, "provide for $2.9 trillion in new budget
authority in fiscal 2018. It would balance the budget by fiscal 2023 by
reducing spending by $10.1 trillion over 10 years. It would cap total
discretionary spending at $1.06 trillion for fiscal 2018 and would
assume no separate Overseas Contingency Operations funding for fiscal
2018 or subsequent years and would incorporate funding related to war or
terror into the base defense account. It would assume repeal of the 2010
health care overhaul and would convert Medicaid and the Children's
Health Insurance Program into a single block grant program. It would
require that off budget programs, such as Social Security, the U.S.
Postal Service, and Fannie Mae and Freddie Mac, be included in the
budget." The underlying legislation was an FY 2018 House GOP budget
resolution. The House rejected the RSC budget by a vote of 139 to 281.
[House Vote 555,
10/5/17; Congressional
Quarterly, 10/5/17; Congressional
Actions, H. Amdt.
455;
Congressional Actions, H. Con. Res.
71]
2017: Fitzpatrick Voted Against The FY 2018 Congressional Progressive
Caucus's Budget Resolution, Which Among Other Things, Increased Taxes On
The Rich And Corporations And Called For Creating A Public Option In The
ACA's Marketplace. In October 2017, Fitzpatrick voted against an FY
2018 CPC budget resolution. According to Congressional Quarterly, the
resolution would "provide for $3.8 trillion in new budget authority in
fiscal 2018, not including off-budget accounts. It would raise overall
spending by $3.5 trillion over 10 years and would increase revenues by
$8.2 trillion over the same period through policies that would increase
taxes for corporations and high-income individuals. It would repeal the
Budget Control Act sequester and caps on discretionary spending, would
modify the tax code by adding five higher marginal tax rates, would
create a public insurance option to be sold within the current health
insurance exchanges and would call for implementation of comprehensive
immigration overhaul." The amendment was a substitute amendment for the
GOP's FY 2018 budget resolution in part designed to start the process
for tax reform. The House rejected the amendment by a vote of 108 to
314. [House Vote 553,
10/4/17; Congressional
Quarterly, 10/4/17; Congressional
Actions, H. Amdt.
453;
Congressional Actions, H. Con. Res.
71]
2019: Fitzpatrick Voted Against Creating A 2.75 Percent Fee On
Criminal Fees, Penalties, Or Settlements With Banks And Corporation That
Commit Corporate Malfeasance To Pay For A 6-1 Matching Public Financing
System For Congressional And Presidential Campaign As Part Of A Larger
Anti-Corruption And Democracy Reform Bill. In March 2019, Fitzpatrick
voted against The 'For The People Act.' According to Vox, "HR 1 covers
three main planks: campaign finance reform, strengthening the
government's ethics laws, and expanding voting rights. Here's the
important part of each section, briefly explained. Campaign finance.
Establishing public financing of campaigns, powered by small donations.
Under the vision of the bill's main sponsor, Rep. John Sarbanes (D-MD),
the federal government would provide a voluntary 6-1 match for
candidates for president and Congress, which means for every dollar a
candidate raises from small donations, the federal government would
match it six times over. The maximum small donation that could be
matched would be capped at $200. The most substantial change to HR 1 is
this program now won't be funded by taxpayer dollars as originally
planned; instead, it will come from adding a 2.75 percent fee on
criminal and civil fines, fees, penalties, or settlements with banks and
corporations that commit corporate malfeasance (think Wells Fargo).
Democrats are using this idea to push back on Republican attacks that
taxpayers shouldn't be subsidizing campaigns." The vote was on passage.
The House passed the bill by a vote of 234 to 193. [House Vote 118,
3/8/19; Vox,
3/8/19;
Congressional Actions, H.R.
1]
2017: Fitzpatrick Voted Against The American Health Care Act That
Which Would Result In 23 Million Fewer Americans With Health Insurance
By 2026 While Also Cutting Taxes For Insurance Company Executives. In
May 2017, Fitzpatrick voted against the American Health Care Act which
would have significantly repealed portions of the Affordable Care Act by
cutting Medicaid, cutting taxes on the rich, removing safeguard for
pre-existing conditions and defunding Planned Parenthood. According to
Congressional Quarterly, the legislation would have "repeal[ed] the
special rule for the limitation of the deduction for remuneration for
health insurance executives, which involves the deduction of
compensation for personal services as an ordinary business expense for
certain health insurance providers, to the extent that such remuneration
exceeds $500,000 (an estimated $400 million cost)." The overall
legislation would have in part, also according to Congressional
Quarterly, "ma[d]e extensive changes to the 2010 health care overhaul
law, by effectively repealing the individual and employer mandates as
well as most of the taxes that finance the current system. It would
[have], in 2020, convert[ed] Medicaid into a capped entitlement that
would provide[d] fixed federal payments to states and end[ed]
additional federal funding for the 2010 law's joint federal-state
Medicaid expansion. [...] It would [have] allow[ed] states to
receive waivers to exempt insurers from having to provide certain
minimum benefits." The vote was on passage. The House passed the bill by
a vote of 217 to 213. The bill, in modified forms, died in the Senate.
[House Vote 256, 5/4/17;
Congressional Quarterly,
3/22/17;
Congressional Quarterly, 5/4/17;
Congressional Actions, H.R.
1628]
Legislation Repeals A Limitation On How Much Insurance Companies
Can Deduct Executive Pay As A Business Expense. According to CNBC,
"The proposed tax break, buried in cryptic language in the
Republican plan, would allow health insurers to more fully deduct
the value of their executives' compensation on their taxes. That
compensation can be as high as tens of millions of dollars, in the
case of CEOs of insurers. Those deductions currently are sharply
limited by the Affordable Care Act, which caps at a maximum of
$500,000 the amount of an individual executive's compensation that
an insurer could deduct as a business expense. The cap applies to
any executive, not just to CEOs." [CNBC,
3/8/17]
CBO Estimated That Repealing The Health Insurance Executive Tax
Limitation Would Reduce Revenue By $500 Million Over Ten Years.
[CBO,
5/24/17]
Legislation Allowed Health Insurers To Write Off The Entire
Amounts Of Their Executives' Salaries As Business Expenses, Beyond
The $500,000 Cap Under The Affordable Care Act. According to
CNBC, "A leading Republican congressman suggested on Tuesday that
lower-income Americans stop buying new iPhones and 'invest in their
own health care.' The comment by Rep. Jason Chaffetz of Utah came a
day after the GOP rolled out a new Obamacare replacement bill that
could increase their insurance costs. The bill also contains a big
new financial treat for health insurance companies. The Republican
plan calls for allowing insurers to write off as a business expense
the entire amount of their executives' salaries on their taxes, and
not just the first $500,000, as is the case now under the
Affordable Care Act." [CNBC,
3/7/17]
LA Times; The ACA's $500,000 Cap Was Intended To Keep Executive
Pay Under Control And Show That The ACA "Wasn't A Pure Giveaway To
The Industry." According to the Los Angeles Times, "As part of an
effort to rein in soaring executive pay, the ACA decreed that health
insurance companies could deduct from their taxes only $500,000 of
the pay of each top executive. That's a tighter restriction than the
limit imposed on other corporations, which is $1 million per
executive. The ACA closed a loophole for insurance companies enjoyed
by other corporations, which could deduct the cost of stock options
and other 'performance-based' pay; for insurance companies, the
deduction cap is $500,000 per executive, period. The idea was to
signal that the ACA, which cemented health insurance companies into
the center of American healthcare, wasn't a pure giveaway to the
industry." [Los Angeles Times,
3/7/17]
LA Times: The Legislation "Encourage[d] Health Insurance
Companies To Pay Their Top Executives More." According to the Los
Angeles Times, "Concealed within the 123 pages of legislative
verbiage and dense boilerplate of the House Republican bill
repealing the Affordable Care Act are not a few hard-to-find
nuggets. Here's one crying out for exposure: The bill encourages
health insurance companies to pay their top executives more. It does
so by removing the ACA's limit on corporate tax deductions for
executive pay." [Los Angeles Times,
3/7/17]
Five Major Insurers Paid Their CEOs $73 Million In 2015, Over
$70 Million Of Which Would Be Tax Deductible Under The GOP Bill.
According to CNN, "Five major insurers paid their CEO's $73
million in 2015, the most recent year for which pay has been
reported. Only $2.5 million of that was deductible under Obamacare
tax laws. But more than $70 million of that would be deductible
under the proposed Republican legislation." [CNN,
3/7/17]
Big Insurers Aetna And Cigna Each Paid Their CEOs Over $17
Million Last Year. According to CNBC, "Big insurers Aetna and
Cigna paid their respective CEOs Mark Bertolini and David Cordani
each more than $17 million in salary last year." [CNBC,
3/7/17]
The Institute For Policy Studies Found That The $500,000 Cap For
Health Insurance Salary Tax Deductions Generated Over $70 Million
In Additional Tax Revenue In 2014. According to BuzzFeed,
"Companies can generally deduct employee salaries as a business
expense but in 2013 the Affordable Care Act capped the deductions on
health insurance executive salaries at $500,000. The average
compensation for top health insurance executives is in the millions.
In 2014 the left-leaning Institute for Policy Studies found that
this cap generated $72 million in additional tax revenue."
[BuzzFeed,
3/6/17]
2021: Fitzpatrick Voted Against Establishing A 15% Alternative Minimum
Tax For Billion-Dollar Corporations And A 1% Tax On Stock Buybacks By
Public Companies. In November 2021, Fitzpatrick voted against the
Build Back Better act which would, according to Congressional Quarterly,
"establish or modify various taxes on corporations and high-income
individuals, including to establish a 15 percent alternative minimum tax
for corporations with an annual income exceeding $1 billion; a one
percent tax on stock buybacks by public companies; and an additional
five percent tax on individual income over $10 million and further
three percent tax on income over $25 million." The vote was on passage.
The House passed the bill by a vote of 220-213. [House Vote 385,
11/19/21; Congressional
Quarterly, 11/19/21;
Congressional Actions, H.R.
5376]
2017: Fitzpatrick Voted For The Final Version Of Trump's Tax Reform
Plan, Which Substantially Cut Taxes For Rich Americans And Corporations,
Including Giving A Significant Cut To Pass-Through Companies. In
December 2017, Fitzpatrick voted for the Tax Cut and Jobs Act, also
known as Trump's tax reform bill. According to Congressional Quarterly,
"This Conference Summary deals with the conference report on HR 1, Tax
Cuts and Jobs Act, which the House will consider Tuesday. The agreement
significantly cuts corporate and individual taxes and seeks to simply
the tax code, although most individual tax provisions would expire after
2025. It reduces the corporate tax from 35% to 21% and reduces taxation
of so-called 'pass-through' businesses where profits are taxed at the
individual rate. For corporate taxes it also establishes a 'territorial'
tax system that exempts most overseas income from U.S. taxation. Most
individual tax rate rates would be reduced, including by dropping the
top rate from 39.6% to 37%, and it eliminates personal exemptions but
nearly doubles the standard deduction so fewer taxpayers will itemize
deductions." The vote was on passage. The House passed the bill by a
vote of 227 to 203. The Senate later passed a slightly modified version
of the bill, which the House later agreed to. President Trump later
signed an amended version of the bill into law. [House Vote 692,
12/19/17; Congressional
Quarterly, 12/18/17;
Congressional Actions, H.R.
1]
Bill Reduced Taxes For Pass-Through Companies Via A 20 Percent
Deduction. According to Vox, "Pass-through companies, like the
Trump Organization, which get a new deduction reducing their tax
burden. The House-Senate compromise bill allows people with
pass-through income to deduct a portion of that income from their
taxes; the deduction is for 20 percent of pass-through income, less
than the 23 percent under the Senate-passed bill." [Vox,
12/18/17]
"Pass-Through" Businesses Are Sole Proprietorships, Partnerships,
LLCs, and S-Corporations Whose Owners Pay Individual Income Taxes On
The Profits. According to CBS News, "The GOP House proposal for
the biggest overhaul in the US tax code in some 30 years has been
out for barely a day, but already it's being dissected to find the
winners and losers. One of the winners most analyses have pointed to
are people who earn their money via so-called pass-through
businesses, such as sole proprietorships, partnerships, limited
liability companies (LLC) and S-corporations. Most business in the
US are organized as one of these entities. According to the
Brookings Institution, about 95 percent of businesses fall into that
category. The Republicans' pro-business tax legislation includes a
potentially valuable break for these business' and their owners.
Here's what you need to know. Income earned by a business organized
as a pass-through entity must be distributed as taxable income to
its owner, members or partners. The pass-through entity itself
doesn't pay income taxes, but it also can't defer tax on profits
to be used later to reinvest in the business. Instead, all of its
income is distributed each year to the individuals who own the
pass-through entity, and they must pay tax on the profits." [CBS
News,
11/3/17]
According To The Center On Budget And Policy Priorities, More Than
Two-Thirds Of Pass-Through Business Income Goes To The Highest 1
Percent Of Tax Filers. According to the Center on Budget and
Policy Priorities, "The Trump pass-through proposal would be an
expensive tax cut that would flow primarily to the wealthiest
Americans. That's because more than two-thirds of pass-through
business income flows to the highest-income 1 percent of tax
filers." [Center on Budget and Policy Priorities,
8/8/16]
Trump Could Save Millions Due To This Change. According to the
New York Times, "Mr. Trump could save as much as $6.2 million on
business income and $9.8 million on income from real estate and
other kinds of partnerships under this plan, compared with his tax
burden under current law. (In 2005, much of this taxable income was
offset by a $103.2 million write-down in business losses.)" [New
York Times,
9/28/17]
Last Minute Added Provision Gave A Tax Break To Real-Estate
Moguls. According to the International Business Times, "President
Donald Trump has made tens of millions of dollars of a specific kind
of income that could be subjected to a last-minute tax break
inserted into the Republicans' tax legislation released Friday,
according to federal records reviewed by International Business
Times. The same is true for Tennessee GOP Sen. Bob Corker --- a
commercial real estate mogul who suddenly switched his vote to 'yes'
on the tax bill after the provision was added to the legislation.
Previously, Corker was the only Republican to vote against the
Senate version of the bill. [...] The reconciled tax bill includes
a new 20 percent deduction for so-called 'pass-through' entities,
business structures such as LLCs, LPs and S-Corporations that don't
pay corporate taxes, but instead 'pass through' income to partners
who pay individual tax rates on that money. The Senate version of
the bill included safeguards that would only allow businesses to
take advantage of the new break if they paid out significant wages
to employees. But the new provision, which wasn't included in either
version of the bill passed by the House and Senate, and was only
added during the reconciliation process, gives owners of
income-producing real estate holdings a way around that safeguard,
effectively creating a new tax break for large landlords and real
estate moguls." [International Business Times,
12/16/17]
2017: Fitzpatrick Voted For The House GOP's 2017 Tax Reform Plan Which
Significantly Cut Taxes For The Rich And Corporations And Significantly
Lowered The Tax Rate For Certain Pass-Through Businesses. In November
2017, Fitzpatrick voted for reconciliation legislation which
significantly altered the federal tax code. According to Congressional
Quarterly, "The bill substantially restructures the U.S. tax code to
simplify the code and reduce taxes on individuals, corporations and
small businesses. For individuals, it consolidates the current seven tax
brackets down to four and eliminates or restricts many tax credits and
deductions, including by eliminating the deduction for state and local
income taxes and limiting the deduction for property taxes to $10,000
and the interest deduction for a home mortgage to the first $500,000
worth of a loan. [...] On the business side, it reduces the corporate
tax from 35% to 20% and establishes a 'territorial' tax system that
would exempt most income derived overseas from U.S. corporate taxation.
It allows businesses to immediately expense 100% of the cost of assets
acquired and placed into service, and for small businesses it raises the
Section 179 expensing limit to $5 million for five years. It also
establishes a 25% rate for a portion of pass-through business income
that would otherwise have to be paid at the ordinary individual tax
level, and for small businesses where an individual would receive less
than $150,000 in pass-through income it taxes the first $75,000 of
that income at a 9% rate." The vote was on passage. The House passed the
bill by a vote of 227 to 205. President Trump later signed an amended
version of the bill into law. [House Vote 637,
11/16/17; Congressional
Quarterly, 11/15/17;
Congressional Actions, H.R.
1]
The Bill Significantly Altered Taxation For So-Called
"Pass-Through" Businesses By Lowering The Rate To 25 Percent;
Certain Professional Firms Would Not Be Subject To The New Lower
Rate. According to Congressional Quarterly, "'Pass-through'
Businesses --- Modifies the treatment of pass-through business
income, which is generally not subject to tax at the business level
but is taxed at the individual level when it is distributed to
owners in the form of profits, wages, or capital gains. It
establishes a new top 25% rate on such pass-through business income,
but generally allows just 30% of a business's net income to be
taxed at that rate, with the remainder being taxed at the
individual's ordinary income rate. Services firms such as lawyers,
accountants and physicians generally could not take advantage of
this rate, except to the extent they have capital investments."
[Congressional Quarterly,
11/15/17]
Trump Could Save Millions Due To This Change. According to the
New York Times, "Mr. Trump could save as much as $6.2 million on
business income and $9.8 million on income from real estate and
other kinds of partnerships under this plan, compared with his tax
burden under current law. (In 2005, much of this taxable income was
offset by a $103.2 million write-down in business losses.)" [New
York Times,
9/28/17]
2017: Fitzpatrick Voted For The Final Version Of Trump's Tax Reform
Plan, Which Substantially Cut Taxes For Rich Americans And Corporations,
And Converted The International Tax System To The So-Called
'Territorial' System. In December 2017, Fitzpatrick voted for the Tax
Cut and Jobs Act, also known as Trump's tax reform bill. According to
Congressional Quarterly, "This Conference Summary deals with the
conference report on HR 1, Tax Cuts and Jobs Act, which the House will
consider Tuesday. The agreement significantly cuts corporate and
individual taxes and seeks to simply the tax code, although most
individual tax provisions would expire after 2025. It reduces the
corporate tax from 35% to 21% and reduces taxation of so-called
'pass-through' businesses where profits are taxed at the individual
rate. For corporate taxes it also establishes a 'territorial' tax system
that exempts most overseas income from U.S. taxation. Most individual
tax rate rates would be reduced, including by dropping the top rate from
39.6% to 37%, and it eliminates personal exemptions but nearly doubles
the standard deduction so fewer taxpayers will itemize deductions." The
vote was on passage. The House passed the bill by a vote of 227 to 203.
The Senate later passed a slightly modified version of the bill, which
the House later agreed to. President Trump later signed an amended
version of the bill into law. [House Vote 692,
12/19/17; Congressional
Quarterly, 12/18/17;
Congressional Actions, H.R.
1]
Legislation Would Convert The U.S. International System To A
Territorial System Where Foreign Profits Are Not Subject To U.S.
Taxes. According to CNN, "Change how U.S. multinationals are
taxed: Today U.S. companies owe Uncle Sam tax on all their profits,
regardless of where the income is earned. They're allowed to defer
paying U.S. tax on their foreign profits until they bring the money
home. Many argue that this 'worldwide' tax system puts American
businesses at a disadvantage. That's because most foreign
competitors come from countries with territorial tax systems,
meaning they don't owe tax to their own governments on income they
make offshore. The Senate bill proposes changes to move the U.S. to
a territorial system. It also includes a number of anti-abuse
provisions to prevent corporations with foreign profits from gaming
the system. And it would require companies to pay a one-time low tax
rate on their existing overseas profits -- 14.5% on cash assets and
7.5% on non-cash assets (e.g., equipment abroad in which profits
were invested), slightly higher than the 14% and 7% rates in the
House bill." [CNN,
12/2/17]
Bill Created A One-Time "Repatriation" Fee Of 15.5 Percent For
Companies That Earned Income Oversees That Is Still Being Held
There. According to Congressional Quarterly, "The agreement
encourages companies to 'repatriate' those stockpiled earnings back
into the United States by offering a much lower, one-time, 15.5% tax
on those foreign earnings held as cash or other liquid form (versus
14% in the House bill) and an 8% tax for any earnings that were
reinvested in illiquid assets). Under the measure, this repatriation
tax could be payable in escalating installments over eight years.
The measure includes special rules for S Corporations, REITs, and
for identifying the scope of earnings and profits subject to the
transition tax." [Congressional Quarterly,
12/18/17]
Moving To A Territorial International Tax System Would Encourage
Outsourcing. According to William Gale of the Tax Policy Center,
"The plan would also move the U.S. toward a territorial tax system,
under which U.S. companies would pay no U.S. taxes on their foreign
income. That would encourage them to ship jobs, capital, and profits
overseas." [Brookings Institution,
10/20/17]
2017: Fitzpatrick Voted For The House GOP's 2017 Tax Reform Plan Which
Significantly Cut Taxes For The Rich And Corporations And Reformed The
International Tax Side To Be A Territorial System. In November 2017,
Fitzpatrick voted for reconciliation legislation which significantly
altered the federal tax code. According to Congressional Quarterly, "The
bill substantially restructures the U.S. tax code to simplify the code
and reduce taxes on individuals, corporations and small businesses. For
individuals, it consolidates the current seven tax brackets down to four
and eliminates or restricts many tax credits and deductions, including
by eliminating the deduction for state and local income taxes and
limiting the deduction for property taxes to $10,000 and the interest
deduction for a home mortgage to the first $500,000 worth of a loan.
[...] On the business side, it reduces the corporate tax from 35% to
20% and establishes a 'territorial' tax system that would exempt most
income derived overseas from U.S. corporate taxation. It allows
businesses to immediately expense 100% of the cost of assets acquired
and placed into service, and for small businesses it raises the Section
179 expensing limit to $5 million for five years. It also establishes a
25% rate for a portion of pass-through business income that would
otherwise have to be paid at the ordinary individual tax level, and for
small businesses where an individual would receive less than $150,000
in pass-through income it taxes the first $75,000 of that income at a
9% rate." The vote was on passage. The House passed the bill by a vote
of 227 to 205. President Trump later signed an amended version of the
bill into law. [House Vote 637,
11/16/17; Congressional
Quarterly, 11/15/17;
Congressional Actions, H.R.
1]
Bill Moves The International Tax System To Something Known As
"Territorial" Where Foreign Profits Are Not Subject To The Corporate
Income Tax. According to Congressional Quarterly, "The bill
replaces the current system of taxing U.S. corporations on the
foreign-source earnings of their foreign subsidiaries with a
dividend-exemption system --- which would exempt from U.S. taxation
100% of the foreign-source portion of dividends paid by a foreign
company to a U.S. corporation, if the U.S. company owns 10% or more
of the foreign entity. Under the measure, U.S. corporations could
not claim any foreign tax credit or deduction for its foreign tax
liability with respect to exempted dividends, and no deductions for
expenses allocable to an exempt dividend would be taken into account
for purposes of determining the U.S. corporation's foreign-source
income." [Congressional Quarterly,
11/15/17]
Moving To A Territorial International Tax System Would Encourage
Outsourcing. According to William Gale of the Tax Policy Center,
"The plan would also move the U.S. toward a territorial tax system,
under which U.S. companies would pay no U.S. taxes on their foreign
income. That would encourage them to ship jobs, capital, and profits
overseas." [Brookings Institution,
10/20/17]
2017: Fitzpatrick Voted Against The FY 2018 Republican Study Committee
Budget Resolution Which In Part Claimed That Moving To A Territorial Tax
System Is An Important Piece Of Tax Reform. In October 2017,
Fitzpatrick voted against a budget resolution that would in part,
according to Congressional Quarterly, "provide for $2.9 trillion in new
budget authority in fiscal 2018. It would balance the budget by fiscal
2023 by reducing spending by $10.1 trillion over 10 years. It would cap
total discretionary spending at $1.06 trillion for fiscal 2018 and
would assume no separate Overseas Contingency Operations funding for
fiscal 2018 or subsequent years and would incorporate funding related to
war or terror into the base defense account. It would assume repeal of
the 2010 health care overhaul and would convert Medicaid and the
Children's Health Insurance Program into a single block grant program.
It would require that off budget programs, such as Social Security, the
U.S. Postal Service, and Fannie Mae and Freddie Mac, be included in the
budget." The underlying legislation was an FY 2018 House GOP budget
resolution. The House rejected the RSC budget by a vote of 139 to 281.
[House Vote 555,
10/5/17; Congressional
Quarterly, 10/5/17; Congressional
Actions, H. Amdt.
455;
Congressional Actions, H. Con. Res.
71]