Tax Reform to Help Families & Small Businesses
PATH Act provides $629 billion of tax relief to families and businesses
Washington-- Chief Deputy Whip Patrick McHenry (R, NC-10) released the following statement after House passage of the Protecting Americans from Tax Hikes (PATH) Act:
“Americans have long sought clarity and certainty when it comes to our tax code and today the House provided just that with passage of the Protecting Americans from Tax Hikes (PATH) Act. This bill is a victory for both families and small businesses. It provides families with greater tax savings by making permanent important individual deductions while also enabling businesses to grow by incentivizing them to reinvest in new equipment.
“Additionally our bill includes a two year moratorium on Obamacare’s job-killing medical device tax and protects Americans from IRS abuse. Most importantly, this bill sets the stage for what our tax code truly needs: a comprehensive rewrite that simplifies the code and lowers rates across the board.”
BACKGROUND- The PATH Act includes a number of provisions to lower the tax burden on individuals and small businesses. Included in the legislation are:
• Research and development (R&D) credit – Allows a company to deduct from their tax liability the amount of their R&D expenditures.
• Section 179 - Allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year.
• Employer wage credit for employees on active duty - Employers receive a tax credit of 20% on wages paid, up to $20,000 for a maximum credit of $4,000, for the time the employee is on active duty.
• Deduction for teacher classroom expenses – Allows a teacher to deduct from their income tax liability any classroom supplies they personally furnished.
• 100% Exclusion on gains from the sale of small business stock – Money earned from the sale of small business stocks is exempted from federal income taxes
• Food inventory deduction – Allows individuals to deduct the cost of food purchased and donated to food banks.
• IRA charitable rollover - Allows you to deduct charitable donations from your IRA
Program Integrity Requirements
The bill includes reforms to ensure the integrity of the Earned Income Tax Credit, the Child Tax Credit, and the American Opportunity Credit. These reforms would prohibit an individual from making retroactive claims for any of these credits for any year in which the individual, or, in the case of the CTC, the child, did not have a social security number for the purposes of the EITC, or an IRS taxpayer identification number for the purposes of the CTC or AOC. These reforms are intended to ensure that no illegal immigrant can utilize these credits.
Tax Administration Provisions
The bill includes a number of provisions intended to better protect taxpayers from abuse and ensure IRS employees are acting in compliance with the law and in the best interest of the taxpayers.
Medical Device Tax Moratorium
Section 174 would impose a two-year moratorium (through calendar year 2017) of the Obamacare 2.3% medical device excise tax.