Lower rates and simplified code highlight tax reform talks

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The National Marine Manufacturers Association is in tax reform discussions and says the legislation is likely to have a major impact on the boating industry if Congress passes it and President Trump signs it into law.

A Senate vote is expected this week on what is the first major reform bill in more than 30 years.

The NMMA supports changes in the proposal and has long called for comprehensive tax reform to unleash the economic power of manufacturing and “ultimately position the U.S. as the best place in the world to build boats,” the trade group wrote in a memo to members.

Since the House of Representatives passed the initial bill, it has seen changes and new proposals as Congress seeks the best path for passage.

A major point of current negotiations is the number of tax brackets. Although a restructuring of the brackets has been agreed upon in principle, the number and tax rates are still being negotiated.

The NMMA has asked for three brackets, with rates set at 12, 25 and 35 percent.

Proposals from the House and Senate show a significant gap; the House has called for four brackets at 12, 25, 35 and 39.6 percent.

Meanwhile, the U.S. Senate Committee on Finance has offered seven brackets — 10, 12, 22, 24, 32, 35 and 38.5 percent.

One of the most significant changes would be to the corporate tax rate — a decrease in the top rate from 35 to 20 percent. However, the House version of the bill begins the 20 percent rate in 2018; the Senate version starts it in 2019.

Neither the House nor the Senate proposal calls for a new luxury tax on boats, something the NMMA calls “a huge win for manufacturers, workers and the American boater.”

The House bill does include changes to the second-home mortgage interest deduction. Under that bill the deduction would not be applicable to second homes and it would be eliminated not only for boats, but also for recreational vehicles and everything else that previously qualified as a second home in the category. For primary residences the mortgage interest deduction has been halved from $1 million to $500,000 and there is no deduction for interest on home equity.

The Senate proposal also would eliminate the home equity deduction, but it would not alter the rest of the provision, which includes the application to second homes, boats and RVs.

Congress still has much work to do to get a bill through the Senate, the NMMA said.

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