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Pros And Cons Of Tax Reform

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Reforms on taxation keep coming up due to changes in law and other regulations that control trade in a country. The tax reform bill of 2018 proposes a permanent reduction of the rate of corporate income tax from 35% to 21%. The legislation has proposed a number of changes to the tax code that will affect both individuals and large businesses (Gentile and Michael 24). Among the various amendments proposed in the bill, a number of them shall affect large businesses. These amendments include the business deduction and exclusion reforms, pass-through taxation and the qualified business income deduction, small business tax reforms, corporate taxes and cost recovery provisions. Partnerships, sole proprietorships, and S-corporation would pay tax on any pass-through income as laid out in their personal tax bracket (Nitti). With the new tax reform, any business that is legible can deduct up to 20% of the qualified business income.
Application of the New Legislation In the tax laws, section 199A gives general allowances to a non-corporate taxpayer a deduction on income tax that is equal to up to 20% of its qualified business income from pass-through businesses. Section 199(a) provides that …show more content…

Section 199(d) 2(B) specifies more businesses that do not qualify for the 20% deduction. These businesses include any trading or dealings with securities, interests in partnerships or commodities and transactions dealing with investment and investment management. The law, however, provides further room for one to seek the 20% deduction. If a person's income is less than $157500 or a couple that files their returns jointly and the total is less than $315000, then such persons may be free to seek the 20%

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