2022: Schweikert 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, Schweikert 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]
2014: Schweikert Voted For Permanently Extending The Five Year Recognition Period For Built-In S-Corporations. In September 2014, Schweikert voted for modifying and permanently business expensing. According to House Republicans, "Title V: H.R. 4453, the S Corporation Permanent Tax Relief Act [...] provides the necessary flexibility for S corporations to access capital and make new investments. [The bill] [a]mends the Internal Revenue Code to reduce from 10 to 5 years the period during which the built-in gains of an S corporation are subject to tax and to make such reduction permanent [,] [p]rovides that the pre-2014 basis-adjustment rule would be made permanent---an S corporation shareholder would reduce the basis in his S corporation stock by his pro rata share of the adjusted basis of the property contributed by the S corporation to a charity [,] [r]etroactively takes effect after December 31, 2013." This provision was part of a larger bill called the Jobs for America Act. The bill passed the House by a vote of 253-163. The bill died in the Senate. [House Vote 513, 9/18/14; GOP.gov, Accessed 9/15/15; Congressional Actions, H.R. 4]
Bill Would Increase Federal Deficits By $1.5 Billion From Fiscal Years 2014 -- 2024. According to the Congressional Budget Office, "The staff of the Joint Committee on Taxation (JCT) estimates that enacting H.R. 4453 would reduce revenues, thus increasing federal deficits, by $1.5 billion over the 2014-2024 period." [Congressional Budget Office, 5/1/14]
Statement of Administrative Policy: Legislation Is A Double Standard For Not Having Offsets, Yet Require Offsets For Emergency Unemployment. According to a Statement of Administrative Policy, "With this legislation, Republicans are imposing a double standard by adding to the deficit to fund tax breaks for businesses, while insisting on offsetting the cost of measures that help middleclass and working Americans, such as the proposed extension of emergency unemployment benefits. House Republicans also are making clear their priorities by rushing to make business tax cuts permanent without offsets even as the House Republican budget resolution calls for raising taxes on 25 million working families and students by letting important improvements to the Earned Income Tax Credit, Child Tax Credit, and education tax credits expire.." [Statement of Administrative Policy, 6/10/14]
Republicans Say The Measure Will Provide S-Corporations With Greater Flexibility. According to Congressional Quarterly, 'Republicans say the measure will provide S-Corporations with greater flexibility to access capital." [Congressional Quarterly, 6/9/14]
2017: Schweikert 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, Schweikert 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: Schweikert 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, Schweikert 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]
2014: Schweikert Voted For Modifying And Permanently Extending Business Expensing. In September 2014, Schweikert voted for modifying and permanently business expensing. According to House Republicans, "would amend section 179 of the Internal Revenue Code, which mostly affects small- to medium-sized businesses, to retroactively and permanently extend from January 1, 2014, increased limitations on the amount of investment that can be immediately deducted from taxable income. H.R. 4457 also indexes the limitations for inflation and expands the definition of property that qualifies for that immediate deduction." This provision was part of a larger bill called the Jobs for America Act. The bill passed the House by a vote of 253-163. The bill died in the Senate. [House Vote 513, 9/18/14; GOP.gov, Accessed 9/15/15; Congressional Actions, H.R. 4]
Bill Would Permanently Extend To $500,000 The Annual Cost Of Property Eligible And Expanding The Eligible Property. According to the Congressional Budget Office, "Permanently extending to $500,000 the annual cost of property eligible for expensing under section 179, expanding the qualifying property eligible under section 179, and indexing the amounts for inflation, would allow firms to deduct immediately from their taxable income the full costs of up to $500,000 in investment of certain equipment from their taxable income, instead of spreading the costs out over time. The benefit of the immediate expensing phases out if total qualifying investment exceeds $2 million, indexed for inflation." [Congressional Budget Office, 5/1/14]
Portion Of The Bill Would Have Increased Federal Deficits By About $73 Billion From Fiscal Years 2014 -- 2024. According to the Congressional Budget Office, "The staff of the Joint Committee on Taxation (JCT) estimates that enacting H.R. 4457 would reduce revenues, thus increasing federal deficits, by about $73 billion over the 2014-2024 period." [Congressional Budget Office, 5/1/14]
Supporters Believe That The Provision Is Necessary To Ensure That Small Businesses Can Continue To Make New Investments. According to Congressional Quarterly, "Supporters of the bill argue that it is necessary to ensure that small businesses can continue to make new investments in property and equipment even as costs rise, affecting more than 10% of small-business tax returns. They say it lowers the cost of capital for tangible property used in business, eliminates depreciation record-keeping requirements with respect to expensed property and removes a disincentive to buying more efficient cooling and heating equipment. They also note that the cost of tax extenders usually has not been offset." [Congressional Quarterly, 6/9/14]
Democrats Mostly Support The Provision, But Criticize The Provision For Not Having Offsets, Yet Require Offsets For Emergency Unemployment. According to Congressional Quarterly, "Democrats say they mostly support increased expensing under Section 179 but criticize Republicans for not offsetting the cost of the bill, noting that permanently extending six tax provisions that GOP leaders want to act on would add $310 billion to the deficit. They say it is "hypocritical" that Republicans won't offset the tax credits but did let emergency unemployment insurance for the long-term unemployed expire because Democrats could not find an offset that the GOP would support." [Congressional Quarterly, 6/9/14]
2017: Schweikert 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, Schweikert 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: Schweikert Voted For The Final Version Of Trump's Tax Reform Plan, Which Substantially Cut Taxes For Rich Americans And Corporations. In December 2017, Schweikert 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: Schweikert 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, Schweikert 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: Schweikert Voted For 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, Schweikert voted for 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: Schweikert 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, Schweikert 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]
2014: Schweikert Voted To Reduce The Top Corporate Income Tax Rate From 35 Percent To 25 Percent. In April 2014, Schweikert voted for the Republican Study Committee's proposed budget resolution for fiscal years 2015 to 2024. According to the Republican Study Committee, "This budget calls on the Ways and Means Committee to issue a tax reform draft that conforms to the following parameters: [...] Reduces the rate of double taxation by lowering the top corporate rate to 25 percent and setting a maximum long-term capital gains tax rate at 15 percent." According to the Tax Policy Center, the current top corporate tax rate is 35 percent. The House considered the RSC budget as a substitute amendment to House Republicans' FY 2015 budget resolution; the amendment was rejected by a vote of 133 to 291. [House Vote 175, 4/10/14; Republican Study Committee, 4/7/14; Tax Policy Center, 4/16/14; Congressional Actions, H. Amdt. 615; Congressional Actions, H. Con. Res. 96]
2013: Schweikert Voted For Cutting the Corporate Income Tax To 25 Percent As Part Of The FY 2014 Ryan Budget. In March 2013, Schweikert voted for a plan to cut the corporate income tax to 25 percent, as part of House Budget Committee Chairman Paul Ryan's (R-WI) proposed budget resolution covering fiscal years 2014 to 2023. According to the House Budget Committee, the budget resolution would "[r]educe the corporate rate to 25 percent." The resolution passed the House by a vote of 221 to 207, but died in the Senate. [House Vote 88, 3/21/13; House Budget Committee, 3/12/13; Congressional Actions, H. Con. Res. 25]
Supporters Claimed A 25 Percent Rate Would Create Jobs, Grow GDP, Increase Income For Families And Increase Stock Value. According to the Heritage Foundation, "The CDA [Heritage Foundation's Center for Data Analysis] analysis of a reduction in the corporate income tax rate to 25 percent shows impressive growth for the U.S. economy. For example: The number of jobs in the U.S. would grow on average by 581,000 annually from 2011 to 2020, with 531,000 on average being created in the private sector each year; U.S. real gross domestic product would rise on average by $132 billion per year; A typical family of four's after-tax income would rise on average by $2,484 per year; U.S. capital stock would grow by an average of $240 billion more per year." [Heritage Foundation, 12/2/10]
Lowering Corporate Tax Rate Below 28 Percent Would Require Additional Spending Cuts Or Raising Taxes On Individuals To Avoid Adding To The Deficit -- Even If All Corporate Tax Preferences Were Removed From The Tax Code. According to the Tax Policy Center, "The non-partisan JCT found that even if Congress scrubbed every single corporate preference from the code (a political fantasy if ever there was one) it could not get the corporate rate below 28 percent without adding to the budget deficit, raising taxes on individuals, or cutting spending." [Tax Policy Center, 11/2/11]
2013: Schweikert Voted To Cut The Corporate Income Tax to 25 Percent. In March 2013, Schweikert voted to support a plan to cut the corporate income tax to 25 percent, as part of the Republican Study Committee's proposed budget resolution covering fiscal years 2014 to 2023. According to the Republican Study Committee, "This budget calls for reducing America's top corporate tax rate from 35 percent to 25 percent." The vote was on an amendment to the House budget resolution replacing the entire budget with the RSC's proposed budget; the amendment failed by a vote of 104 to 132 with 171 Democrats voting present. According to Congressional Quarterly, "Repeating a strategy from last year, 171 Democrats voted "present" to push Republicans to vote against the RSC plan to make sure it did not have enough support to replace the Ryan plan." [House Vote 86, 3/21/13; Republican Study Committee, 3/18/13; Congressional Quarterly, 3/25/13; Congressional Actions, H. Amdt. 35; Congressional Actions, H. Con. Res. 25]
Supporters Claimed A 25 Percent Rate Would Create Jobs, Grow GDP Increase Income For Families And Increase Stock Value. According to the Heritage Foundation, "The CDA [Heritage Foundation's Center for Data Analysis] analysis of a reduction in the corporate income tax rate to 25 percent shows impressive growth for the U.S. economy. For example: The number of jobs in the U.S. would grow on average by 581,000 annually from 2011 to 2020, with 531,000 on average being created in the private sector each year; U.S. real gross domestic product would rise on average by $132 billion per year; A typical family of four's after-tax income would rise on average by $2,484 per year; U.S. capital stock would grow by an average of $240 billion more per year." [Heritage Foundation, 12/2/10]
Lowering Corporate Taxes To 25% Would Require, Adding To The Deficit, Spending Cuts Or Raising Taxes On Individuals. According to the Tax Policy Center, "The non-partisan JCT found that even if Congress scrubbed every single corporate preference from the code (a political fantasy if ever there was one) it could not get the corporate rate below 28 percent without adding to the budget deficit, raising taxes on individuals, or cutting spending." [Tax Policy Center, 11/2/11]
2015: Schweikert Effectively Voted Against Redefining What It Means To Be A Domestic Or Foreign Company As A Means To Limit Corporate Inversions. In July 2015, Schweikert effectively voted against attempting to limit corporate inversions. According to Congressional Quarterly, the motion was to, "establish new thresholds for what constitutes a domestic versus foreign corporation, specifically under circumstances in which a foreign corporation has acquired properties or assets held by a domestic corporation or more than 50 percent of the stock held by such a corporation, thus preventing U.S. corporations from 'inverting' their corporate residence from the United States to other low tax countries." The underlying bill would have, according to Congressional Quarterly, "reauthorize[d] federal-aid highway and transit programs through Dec. 18, 2015 and would transfer $8.1 billion in funding from the Treasury to the Highway Trust Fund to cover projected trust fund shortfalls over that time." The vote was on the motion to recommit with instructions and the House rejected the motion 185 to 244. [House Vote 440, 7/15/15; Congressional Quarterly, 7/15/15; Congressional Actions, H.R. 3038]
Corporate Inversions Are A Way For A U.S. Based Multinational Company To Avoid U.S Taxes By Restructuring So That The Parent Is Based Outside Of The United States. According to the Treasury Department, "A corporate inversion is transaction in which a U.S. based multinational restructures so that the U.S. parent is replaced by a foreign parent, in order to avoid U.S. taxes. Current law subjects inversions that appear to be based primarily on tax considerations to certain potentially adverse tax consequences, but it has become clear by the growing pace of these transactions that for many corporations, these consequences are acceptable in light of the potential benefits." [Treasury.gov, 9/22/14]
White House: Corporate Inversions Were Projected To Cost The United States Over $20 Billion Over The Next Decade. According to the White House, "One [...] loophole allows U.S. corporations to undertake an 'inversion,' whereby a company relocates their tax residence overseas, while changing very little else about its operations or business, in order to avoid paying taxes. [...] By renouncing their U.S. citizenship, these companies will cost our country nearly $20 billion over the next decade -- critical dollars that could be used to grow and expand the middle class." [WhiteHouse.gov, 9/26/14]
Rep. Chris Van Hollen (D- MD): Corporate Inversions Were "Cheating The American Taxpayers." According to a floor speech by Rep. Hollen, "We have put forward a 6-year plan, the first 2 years fully funded of a more robust plan. How do we fund it? We fund it by saying 'no more' to the companies, the American companies that are cheating the American taxpayers by inversion. So what are they doing? They are simply changing their addresses to an overseas address so they don't have to pay any more into helping our infrastructure and helping our country. Let me give you an example of what these companies are doing. They are not moving their employees. They are not moving their management. They are not moving their factories or anything else. They are just changing their mailing address by acquiring a small foreign company and, in doing so, saying: We are not going to pay any more of our taxes." [Congressional Record, 7/15/15]
2014: Schweikert Voted Against Denying Increased Depreciation Tax Benefits To Recent Corporate Inverters, And Against Extending Those Benefits For Two Years Rather Than Making Them Permanent. In July 2014, Schweikert effectively voted against an amendment that, according to Congressional Quarterly, "would have provided for a two-year extension of the tax break [in the underlying bill], coupled with curbs on tax breaks for multinational corporations that shift operations offshore." Specifically, according to a separate Congressional Quarterly article, the amendment "would [have] prohibit[ed] inverted domestic corporations formed after May 8, 2014 from using [the] special bonus depreciation rules [extended by the underlying bill]. It would exempt such corporations that do a substantial amount of their business in its country of incorporation." The vote was on a motion to recommit the bill to the House Ways and Means Committee, with instructions that it be reported back immediately with the specified amendment; the House rejected the motion by a vote of 191 to 229. [House Vote 403, 7/11/14; Congressional Quarterly, 7/11/14; Congressional Quarterly, 7/11/14; Congressional Actions, H.R. 4718]
2019: Schweikert 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, Schweikert 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]
2013: Schweikert Voted For A One Year Repatriation Holiday For Foreign Business Income. In March 2013, Schweikert voted to support a plan for a one year foreign business income repatriation holiday, as part of the Republican Study Committee's proposed budget resolution covering fiscal years 2014 to 2023. According to the Republican Study Committee, "To encourage businesses to bring the estimated $1.2 trillion of capital stranded overseas back into the U.S. economy, the legislation lowers the tax on foreign earned profits repatriated by U.S. corporations to 5.25 percent for one year." The vote was on an amendment to the House budget resolution replacing the entire budget with the RSC's proposed budget; the amendment failed by a vote of 104 to 132 with 171 Democrats voting present. According to Congressional Quarterly, "Repeating a strategy from last year, 171 Democrats voted "present" to push Republicans to vote against the RSC plan to make sure it did not have enough support to replace the Ryan plan." [House Vote 86, 3/21/13; Republican Study Committee, 3/18/13; Congressional Quarterly, 3/25/13; Congressional Actions, H. Amdt. 35; Congressional Actions, H. Con. Res. 25]
The Congressional Research Service Determined That Companies That Benefited From A Similar Holiday In 2004 Cut Employment And Used The Repatriated Funds To Purchase Stock Or Pay Dividends. According to the Treasury Department's "Treasury Notes" blog, "In assessing the 2004 tax holiday, the nonpartisan Congressional Research Service reports that most of the largest beneficiaries of the holiday actually cut jobs in 2005-06 -- despite overall economy-wide job growth in those years -- and many used the repatriated funds simply to repurchase stock or pay dividends." [Treasury Department, 3/23/11]
Fewer Than 2 Out Of Every 1,000 People Who Die Were Affected By The Estate Tax. According to the Center on Budget and Policy Priorities, "The estate tax is best characterized as a tax on very large inheritances by a small group of wealthy heir . Today, only the estates of the wealthiest 0.14 percent of American fewer than 2 out of every 1,000 people who die --- owe any estate tax whatsoever because of the high exemption amount , which has more than quadrupled since 2001." [Center for Budget and Policy Priorities, 8/29/13]
2017: Schweikert Voted For 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, Schweikert voted for 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: Schweikert 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, Schweikert 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: Schweikert 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, Schweikert 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: Schweikert 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, Schweikert 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: Schweikert 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, Schweikert 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: Schweikert 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, Schweikert 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: Schweikert Voted For 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, Schweikert voted for 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]
2013: Schweikert Voted For Shifting From A "Worldwide" System Of Taxation To A "Territorial" System For Corporate Income As Part Of The FY 2014 Ryan Budget. In March 2013, Schweikert voted for shifting from a "worldwide" system of taxation to a "territorial" system for corporate income, as part of House Budget Committee Chairman Paul Ryan's (R-WI) proposed budget resolution covering fiscal years 2014 to 2023. According to the text of Ryan's budget "The 'worldwide' structure of U.S. international taxation essentially taxes earnings of U.S. firms twice, putting them at a significant competitive disadvantage with competitors with more competitive international tax systems. Reforming the U.S. tax code to a more competitive international system would boost the competitiveness of U.S. companies operating abroad and it would also greatly reduce tax avoidance." The resolution passed the House by a vote of 221 to 207, but died in the Senate. [House Vote 88, 3/21/13; Congressional Record, 3/21/13; Congressional Actions, H. Con. Res. 25]
Supporters of A "Territorial" System Claimed That It Reduced Compliance Costs For Corporations. According to the Tax Foundation, "In addition, territorial tax reform could substantially reduce the compliance costs for both firms and the government. Such costs now tally over $40 billion annually, with a disproportionate share associated with the international requirements of the tax code. If the code was simplified, particularly regarding the foreign tax credit and expense allocation regimes, tax planning expenditures would be diverted to productive uses, rather than sunk into the deadweight loss of regulatory compliance" [Tax Foundation, 8/10/12]
Supporters of A "Territorial" System Claimed That It would Bring Foreign Earnings Back To The U.S. According to the Tax Foundation, "eliminating the tax on repatriation would invite vast sums of foreign-held earnings back into the U.S. Though it is unrealistic to expect all $1.7 trillion to return, there is evidence that a very sizable portion would flow back into the U.S. In the 2004 repatriation holiday, U.S. companies brought home $360 billion of the roughly $800 billion held abroad. Following the same ratio, $765 billion could be poised for return under similar conditions." [Tax Foundation, 8/10/12]
Depending On Rules, Enforcement And Behavior, Territorial Based Corporate Income Taxation Could Result In Anything Between A $130 Billion Tax Break To A $67 Billion Tax Increase For Businesses Over Ten Years. According to The President's Economic Recovery Advisory Board, "According to rough estimates from the Treasury, a simplified territorial system without full expense allocation rules would lose approximately $130 billion over the 10-year budget window. In contrast, a territorial system with full application of expense allocation rules could be revenue neutral or could raise revenue depending on the behavioral responses of corporations and the ability of the IRS to police transfer pricing and expense allocations. Indeed, earlier studies from the JCT (Joint Committee on Taxation), Treasury, and the Congressional Budget Office (CBO) have scored territorial tax systems with expense allocation rules based on the current rules used for the foreign tax credit as raising between $40 billion and $76 billion over 10 years." [The President's Economic Recovery Advisory Board, 8/10]
CBPP: Territorial Based Taxation Would Encourage Corporations To Move Profits And Investment Out Of The U.S. According to the Center on Budget and Policy Priorities, "Under a territorial system, U.S.-based multinationals would face a top tax rate (currently 35 percent before they lower their taxes by using deductions and credits) on their domestic income and a zero or very low tax rate on their foreign income. That would give U.S.-based multinationals a strong incentive to shift their operations from the United States to low-tax countries or so-called "tax havens," or to artificially shift their profits by using what are known as "earnings stripping" techniques." [Center on Budget and Policy Priorities, 1/21/13]
CBPP: Territorial Based Taxation Might Lead To Increased Taxes On Small And Domestic Businesses. According to the Center on Budget and Policy Priorities, "If policymakers sought to offset the lost revenues from a territorial system (and any cut in the U.S. corporate tax rate), they would likely do so by broadening the business tax base. Business base broadening would have to rely on reducing large tax breaks for domestic activity (since overseas activity would be largely or entirely free of U.S. tax), thereby reducing incentives for domestic investment. Thus, even if policymakers cut the top statutory tax rate as they adopted a territorial system, smaller domestic businesses could well face higher taxes." [Center on Budget and Policy Priorities, 1/21/13]
CBPP: A Territorial Tax System Might Encourage U.S. Capital To Move Offshore, Causing U.S. Wages To Fall. According to the Center on Budget and Policy Priorities, "If a lower U.S. tax rate on foreign profits encourages capital to move offshore, basic economic theory predicts that the returns to U.S. capital would rise but that the wages of U.S. workers would fall. As Jane Gravelle, a leading tax economist at the Congressional Research Service (CRS), testified before Congress, '[Moving to a territorial system] would make foreign investment more attractive. That would cause investment to flow abroad, and that would reduce the capital which workers in the United States have, so it should reduce wages. A capital flow reduces wages in the United States [and] increases the wages abroad.'" [Center on Budget and Policy Priorities, 1/21/13]
2013: Schweikert Voted To Shift From A "Worldwide" System Of Taxation To A "Territorial" System For Corporate Income. In March 2013, Schweikert voted to support shifting from a "worldwide" system of taxation to a "territorial" system for corporate income, as part of the Republican Study Committee's proposed budget resolution covering fiscal years 2014 to 2023. According to the text of the Republican Study Committee's budget "This budget directs the House Ways and Means Committee to identify tax deductions and credits that could be eliminated and to report legislation transitioning the U.S. to a territorial tax system." The vote was on an amendment to the House budget resolution replacing the entire budget with the RSC's proposed budget; the amendment failed by a vote of 104 to 132 with 171 Democrats voting present. According to Congressional Quarterly, "Repeating a strategy from last year, 171 Democrats voted "present" to push Republicans to vote against the RSC plan to make sure it did not have enough support to replace the Ryan plan." [House Vote 86, 3/21/13; Republican Study Committee, 3/18/13; Congressional Quarterly, 3/25/13; Congressional Actions, H. Amdt. 35; Congressional Actions, H. Con. Res. 25]
Supporters of A "Territorial" System Claimed That It Reduced Compliance Costs For Corporations. According to the Tax Foundation, "In addition, territorial tax reform could substantially reduce the compliance costs for both firms and the government. Such costs now tally over $40 billion annually, with a disproportionate share associated with the international requirements of the tax code. If the code was simplified, particularly regarding the foreign tax credit and expense allocation regimes, tax planning expenditures would be diverted to productive uses, rather than sunk into the deadweight loss of regulatory compliance" [Tax Foundation, 8/10/12]
Supporters of A "Territorial" System Claimed That It would Bring Foreign Earning Back To The U.S. According to the Tax Foundation, "eliminating the tax on repatriation would invite vast sums of foreign-held earnings back into the U.S. Though it is unrealistic to expect all $1.7 trillion to return, there is evidence that a very sizable portion would flow back into the U.S. In the 2004 repatriation holiday, U.S. companies brought home $360 billion of the roughly $800 billion held abroad. Following the same ratio, $765 billion could be poised for return under similar conditions." [Tax Foundation, 8/10/12]
Depending On Rules, Enforcement And Behavior, Territorial Based Corporate Income Taxation Could Result In Anything Between A $130 Billion Tax Break To A $67 Billion Tax Increase For Businesses Over Ten Years. According to The President's Economic Recovery Advisory Board, "According to rough estimates from the Treasury, a simplified territorial system without full expense allocation rules would lose approximately $130 billion over the 10-year budget window. In contrast, a territorial system with full application of expense allocation rules could be revenue neutral or could raise revenue depending on the behavioral responses of corporations and the ability of the IRS to police transfer pricing and expense allocations. Indeed, earlier studies from the JCT (Joint Committee on Taxation), Treasury, and the Congressional Budget Office (CBO) have scored territorial tax systems with expense allocation rules based on the current rules used for the foreign tax credit as raising between $40 billion and $76 billion over 10 years." [The President's Economic Recovery Advisory Board, 8/10]
CBPP: Territorial Based Taxation Would Encourage Corporations To Move Profits And Investment Out Of The U.S. According to the Center on Budget and Policy Priorities, "Under a territorial system, U.S.-based multinationals would face a top tax rate (currently 35 percent before they lower their taxes by using deductions and credits) on their domestic income and a zero or very low tax rate on their foreign income. That would give U.S.-based multinationals a strong incentive to shift their operations from the United States to low-tax countries or so-called "tax havens," or to artificially shift their profits by using what are known as "earnings stripping" techniques." [Center on Budget and Policy Priorities, 1/21/13]
CBPP: Territorial Based Taxation Might Lead To Increased Taxes On Small And Domestic Businesses. According to the Center on Budget and Policy Priorities, "If policymakers sought to offset the lost revenues from a territorial system (and any cut in the U.S. corporate tax rate), they would likely do so by broadening the business tax base. Business base broadening would have to rely on reducing large tax breaks for domestic activity (since overseas activity would be largely or entirely free of U.S. tax), thereby reducing incentives for domestic investment. Thus, even if policymakers cut the top statutory tax rate as they adopted a territorial system, smaller domestic businesses could well face higher taxes." [Center on Budget and Policy Priorities, 1/21/13]
CBPP: A Territorial Tax System Might Encourage U.S. Capital To Move Offshore, Causing U.S. Wages To Fall. According to the Center on Budget and Policy Priorities, "If a lower U.S. tax rate on foreign profits encourages capital to move offshore, basic economic theory predicts that the returns to U.S. capital would rise but that the wages of U.S. workers would fall. As Jane Gravelle, a leading tax economist at the Congressional Research Service (CRS), testified before Congress, '[Moving to a territorial system] would make foreign investment more attractive. That would cause investment to flow abroad, and that would reduce the capital which workers in the United States have, so it should reduce wages. A capital flow reduces wages in the United States [and] increases the wages abroad.'" [Center on Budget and Policy Priorities, 1/21/13]