06/20/2015
Corporate Tax Rate
The President’s budget would reduce the corporate tax rate to 28 percent, with a 25 percent effective rate for domestic manufac- turing. The rate reduction would be offset, in part, by eliminating fossil fuel tax breaks and other unspecified business tax incen- tives to “broaden the tax base.”
IMPACT. Previous statements by the White House and Congressional GOP leaders have indicated some common ground on reducing the corporate tax rate but show disagreement over how to pay for any reduction. Although President Obama’s proposal is not brand new, re- newed interest in the corporate tax area as
“President Obama’s
FY 2016 Budget immediately made headlines as containing some room for deal making and compromise.”
Education
Under the President’s plan, the American Opportunity Tax Credit (AOTC) would be made permanent and would be consolidat- ed with other education incentives.
IMPACT. The maximum refundable AOTC would be increased, and the AOTC would be available for five years as well as extended to part-time students.
COMMENT. The President’s budget would repeal or let expire the Lifetime Learning Credit, the higher education tuition deduc- tion, the student loan interest deduction (for new borrowers), and Coverdell Education Savings Accounts (for new contributions). The President, however, backed down on his recent attempt to return to the pre-2001 taxation of 529 plans (i.e. no exclusion for withdrawals for educational purposes).
Estate and Gift Planning
The President’s budget would generally treat bequests and gifts of appreciated property
Tax Briefing
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February 4, 2015
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a starting point for “tax reform” is becom- ing more evident.