I know Congress has yet to resolve the “fiscal cliff” issue, but while they negotiate the final terms of any proposed settlement, I think we need to start looking ahead at 2013. We optimistically believe that Congress will strike a deal this year which will pave the way for significant pro-business tax incentives for 2013.
Earlier this year, President Obama introduced a Framework for Business Tax Reform. This framework calls for Congress to “cut loopholes” and broaden the tax base in exchange for a reduction in the corporate tax rate. We have thought for sometime that this would a major bargaining chip for the Republicans in the the current “fiscal cliff” negotiations.
Under the framework, the highest U.S. corporate income tax bracket would be reduced from 35% to 28%, and preferences retained in the reformed tax system would be made permanent so as to provide certainty to businesses. There would be additional benefits for research and development, manufacturing, and clean energy. This type of reform could lead the way for economic recovery and job creation.
Whether this type of reform is part of the “fiscal cliff” deal is yet to be seen, but we believe it will occur before the end of 2013. Once we have final, definitive answers to this and other new policy we will let you know.
If you have any questions regarding the current or proposed future tax structure, please do not hesitate to contact us.