On Friday, House and Senate Republicans came to an agreement on a joint tax plan that reconciles the two versions passed by congress earlier this year. They hope to vote on the new bill this week and send it to President Donald Trump to sign before Christmas. The bill includes several points that could aid the foodservice industry, since many of the tax breaks would let restaurants and their owners keep larger shares of the profits.
One provision that could aid restaurants would reduce the corporate tax rate from 35 to 21 percent. The bill also removes the alternative minimum tax faced by corporations, which currently limits certain deductions businesses take. Both of these changes would all restaurants registered as corporations to pay less in taxes overall.
Additionally, CNN Money reports that “pass-through businesses,” small business owners, partners, and shareholders in S-corporations, partnerships, and LLCs who pay business taxes through their individual returns, would receive a 20 percent reduction in taxes. Additionally, the bill does make provisions to prevent abuses spurred by the lower rate by lowering the amount of income that would qualify for this deduction. This move previously offered the industry some tax benefits, since corporations were paying higher amounts than individuals, and many restaurants operate under this tax structure. Those using this method would find some tax relief with the reduced rates; however, by reducing the corporate tax rate, fewer foodservice businesses may choose this tax structure.
Additionally, corporate tax provisions are permanent under this bill, but individual provisions are set to expire by 2025, meaning that businesses could see benefits for many years.
The bill has been met with opposition from the Democratic Party, as well as Republicans who have since decided to support the bill, such as Senators Marco Rubio of Florida, who insisted that the child tax credit be increased in the final version, and Bob Corker of Tennessee, who began supporting the bill after a provision aided real estate holdings. Additionally, Arizona senator John McCain will be absent from the vote as he recovers from cancer treatment. The Washington Post reports that in the Senate, the GOP will need the help of Democrats to pass the bill and have not made much progress in winning them over.
Republicans, however, have stated that they are confident the bill will still pass, as several holdouts have now shown support for the bill, and will likely call for a vote later this week.