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1 Michael Schuyler, Updated: Details and Analysis of the Nunes Plan to Reform Business Taxation 1 (2016)

handle is hein.taxfoundation/danunbtx0001 and id is 1 raw text is: TAXO FOUNDATION FISCAL FACT Jan. 2016 No. 494 The Tax Foundation is a 501(c)(3) non-partisan, non-profit research institution founded in 1937 to educate the public on tax policy. Based in Washington, DC, our economic and policy analysis is guided by the principles of sound tax policy: simplicity, neutrality, transparency, and stability. @2016 Tax Foundation Distributed under Creative Commons CC-BY NC 4.0 Editor, Melodie Bowler Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org UPDATED: Details and Analysis of The Nunes Plan to Reform Business Taxation By Michael Schuyler Senior Fellow In early 2015, the Tax Foundation released a paper that examined a business tax reform plan developed by Representative Devin Nunes (R-CA).1 Using the Tax Foundation's Taxes and Growth (TAG) Model, we estimated the growth and revenue effects if the plan were enacted. Since then, Rep. Nunes has refined his proposal. The thrust of the plan remains the same as before - reduce tax biases that discourage business activity and simplify the tax treatment of businesses - but some of the provisions have been clarified or modified. This paper is an update of the earlier one in two senses. It models Rep. Nunes' revised plan. It also employs a newer version of the Taxes and Growth Model. The results here supersede the earlier ones. Executive Summary Representative Devin Nunes (R-CA) seeks to reform the federal government's tax treatment of business income. Major elements of his plan are: * Cutting the corporate income tax to 25 percent; * Limiting the top tax rate on non-corporate business income to 25 percent; * Allowing businesses to deduct investment costs when they occur (full expensing); * Eliminating most business tax credits and many deductions; * Moving to a territorial tax system like most developed nations; * No longer letting nonfinancial businesses deduct interest costs but no longer taxing them on interest receipts; * Applying the same tax-rate limitation to individuals' interest income as now applies to their capital gains and dividend income; and * Eliminating the individual and corporate alternative minimum taxes (AMTs). 1 Michael Schuyler, The Growth Effects of the Nunes Plan to Reform Business Taxation Tax Foundation, February 26, 2015, http://taxfoundation.org/article/growth-effects-nunes-plan-reform-business-taxation.