On September 27 the Trump Administration and Congressional leaders released the “Unified Framework for Fixing Our Broken Tax Code,” the new outline for tax reform in America. The framework is designed to serve as a template for the tax-writing committees to draft legislation.
While the framework addresses both personal and business taxes, there are several provisions relevant to the retail real estate industry:
- Passthrough Business Rate – Limits the tax rate to 25% and directs Congress to adopt measures to prevent the re-characterization of personal income into business income.
- Expensing – Allows for immediate expensing of new investments in depreciable assets other than buildings and structures for at least five years. ICSC had expressed its concern to policymakers that the expensing of structures could lead to tax-driven investing and harm the long-term health of the retail real estate industry.
- Interest Deduction – The deduction for net interest expense incurred by C Corps will be partially limited; Congress is directed to consider appropriate treatment of interest paid by non-corporate tax payers.
- Capital Gains, Carried Interest/LKE – The framework is silent on capital gains rates, as well as the treatment of carried interest and like-kind exchanges.
- Estate Tax and Generation-Skipping Transfer Tax – Repealed, but framework is silent on step-up basis. Legislation introduced by Sen. Thune and Rep. Noem, however, leaves step-up basis intact.
The release of this framework marks an important step forward; however, there is still substantial work required by Congress to produce draft legislation. ICSC continues to engage Capitol Hill and collaborate with various organizations to ensure the interests of our industry are protected.
If you have any questions about ICSC tax reform efforts in Washington or about the proposal, please contact Phillips Hinch, Vice President of Tax Policy, at email@example.com or 202-626-1402.