MSCI Opposes Effort To Raise U.S. Top Marginal Income Tax Rate
As Connecting the Dots readers are well aware, members of the U.S. Senate and House of Representatives are hoping to consider legislation this year that would extend expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA). Among the provisions that will disappear if Congress does not act are reductions in the individual income tax rates that both individual taxpayers and many pass-through businesses pay.
Unfortunately, supportive lawmakers are not only fighting to keep the 2017 reductions, which helped to spur job and economic growth, they are fighting efforts to raise these rates. According to Bloomberg, at least two Republican lawmakers have said they are open to raising the top individual rate to 40 percent. (The rate was cut from 39.6 percent to 35 percent in 2017.) Specifically, House Freedom Caucus Chairman Andy Harris (R-Md.) has said he would support imposing a new 40 percent tax bracket on those taxpayers who earn $1 million or more a year. Sen. Thom Tillis (R-N.C.) also said he would consider letting the top rate spring back to 39.6 percent as long as there were some parameters around it, including for owners of privately held companies that pay their business taxes on their household returns.
A 40 percent top rate would be the highest the top rate has been since 1986.
Industry advocacy on this matter is more important than ever: last week, the U.S. House of Representatives took the first step to renewing the expiring provisions of the Tax Cuts and Jobs Act. On a 216 to 214, lawmakers in the lower chamber approved a budget resolution that will allow the chamber’s tax writers to reduce taxes by $3.8 trillion over 10 years. Members of the U.S. House and Senate will now determine how to allot those reductions to specific policies and whether to offset tax cuts with other revenue raisers such as increasing the top individual income tax rate.
To make the industrial metals industry’s stance on this matter clear, last week the Metals Service Center Institute joined a letter signed by more than 90 trade associations opposing an increase in the top individual income tax rate. “Pass-throughs comprise over 95 percent of all businesses and employ 62 percent of the nation’s workforce,” the letter noted. “Most pass-through business income is taxed at the top rates, so raising these rates would harm Main Street businesses engaged in just about every aspect of the economy. They are responsible for employing millions of Americans, driving investment, and supporting local economies nationwide.”
Read the full letter at this link and stay tuned to Connecting the Dots as this process moves forward.