Tue November 28, 2017

As the saga of tax reform is moving quickly in Congress, PLASTICS is monitoring the situation and this page will be updated as new information becomes available (last update: 9am, 12/12). PLASTICS supports tax reform, particularly the provisions on pass-through income, immediate expensing on capital equipment and reduced corporate tax rates (there are details on these provisions below). Every plastics company in the U.S., regardless of size or industry segment, has the potential to benefit from these changes. Stay tuned to find out what you can do to help support the bill's passage.

    The Latest

    A House-Senate Conference Committee is set to begin negotiations on December 13 to hammer out the differences between the House- and Senate-passed tax reform bills to craft a final bill, H.R. 1, to be voted on, without amendment, in each house. The Trump Administration and Republican congressional leaders are racing against the clock to get a final bill passed and sent to President Trump before the end of the year.

    The members of the Conference Committee are as follows:

    House Republicans   

    Kevin Brady (R-TX) – Chairman, Devin Nunes (R-CA), Peter Roskam (R-IL), Diane Black (R-TN), Rob Bishop (R-UT), Don Young (R-AK), Fred Upton (R-MI) and John Shimkus (R-IL).

    House Democrats

    Richard Neal (D-MA), Sander Levin (D-MI), Lloyd Doggett (D-TX), Raul Grijalva (D-AZ) and Kathy Castor (D-FL).

    Senate Republicans

    Orrin Hatch (R-UT), John Cornyn (R-TX), John Thune (R-SD), Rob Portman (R-OH), Tim Scott (R-SC), Pat Toomey (R-PA), Mike Enzi (R-WY) and Lisa Murkowski (R-AL).

    Senate Democrats

    Ron Wyden (D-OR), Bernie Sanders (I-VT), Patty Murray (D-WA), Maria Cantwell (D-WA), Bob Menendez (D-NJ) and Tom Carper (D-DE).

    How We Got Here

    The House of Representatives passed H.R. 1, the Tax Cuts and Jobs Act, November 16 by a vote of 227-205 with every Democrat and 13 Republicans voting against it. That same night, the Senate Committee on Finance passed its version of tax reform, also along party lines. Before the measure could be considered by the full Senate, the Senate Budget Committee had to approve the budget reconciliation resolution, which it did November 28. On the Senate floor, the bill passed by the slimmest of margins with 51 Republicans voting to advance the bill and no Democrats joining. 

    What Matters to the Plastics Industry

    • Pass-Through Business Income: The House bill would lower the rate for pass-through business income to 25 percent (down from 39.6 percent, which is the top personal income tax rate that many of these businesses pay already). It also features a provision that would create an even lower tax rate (just 9 percent) on the first $37,500 or $75,000 of net business income for individual and joint filers, respectively. This lower rate only applies to joint filers reporting business income up to $150,000, and individual filers reporting business income up to $75,000. 

      The Senate takes a slightly different approach by providing a 17.4 percent deduction for pass-through business owners, rather than an outright cut to the rate at which this income is taxed. The upper chamber's bill also includes other measures that would allow more companies to avail themselves of this deduction.

    • Corporate Tax Rate: Both the House and the Senate versions of the bill would cut the corporate tax rate from 35 percent to 20 percent, but the House's version does so immediately, whereas the Senate would delay the cut until 2019.
    • Full and Immediate Expensing: Both versions of tax reform include a potentially beneficial measure for the plastics industry in the form of full and immediate expensing of capital expenditures for a period of five years. This means that manufacturers could fully deduct the cost of their spending on new equipment right away, whereas currently this deduction has to be spread out over several years.