The $1 trillion package provides $12.5 billion in increased military funding, about half the amount President Trump requested. Another $2.5 billion for defense is available if the administration submits a counterterrorism strategy to fight ISIS. The agreement provides no money for a border wall and would not block sanctuary cities from receiving grant funding. However, it does provide $1.5 billion in new border security spending aimed at repairing existing infrastructure and increasing technology.
It also does not include the president’s proposed $18 billion cuts to non-defense spending, but instead adds $4.6 billion in new non-defense spending, including increases in clean energy and science funding, increases to Department of Energy’s Office of Science, and increases ARPA-E funding. It decreases EPA spending by only one percent rather than the 31 percent cut the administration requested.
Next up is the FY2018 budget and appropriations process that could prove even more contentious and difficult in reaching an agreement.
President introduces tax blueprint
Just days before his 100th day in office, President Trump introduced his long-awaited, much discussed tax proposal. Rather than a broad overhaul of the tax code that the House leadership wants to enact, the plan is a massive tax cut designed to stimulate the economy and deliver tax relief to the middle class. While the plan lacks many details right now, below are the broad strokes of the proposal.
- Corporate tax rate of 15 percent: The U.S. corporate tax rate would go from the highest in the industrial world to the lowest. The 15 percent rate would also apply to pass-through entities, a designation claimed by many manufacturers.
- No border-adjustment tax: This is the most controversial provision in the House plan. The president opted to leave it out.
- Repeal of the estate tax, the alternative minimum tax and the tax on net investment income.
- A one-time repatriation tax: no details on the rate or whether repatriation would be required rather than optional.
- No infrastructure spending.
- Combines seven individual brackets to three at rates of 35 percent, 25 percent, and 10 percent.
- Doubles the standard individual deduction; includes the mortgage interest deduction and deduction for charitable giving; eliminates all other deductions.
Although the president offered no timeline to pass his proposal, Treasury Secretary Steve Mnuchin said he expects it will be done as soon as possible. No word on how this will play in Congress given the price tag and the efforts for comprehensive reform in the House. Please let your members of Congress know how this proposal would impact your company. They are looking for your input. AMT would also appreciate your thoughts on the president’s proposal vs. the House tax proposal explained in my earlier column.