Page 28 - MetalForming January 2017
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What to Expect from Washington, D.C.
 Regardless of Congressional support, some indicate that the administration is preparing to go it alone without Capi- tol Hill. Specifically, airports and inter- state highways are targeted as areas where the administration already has authority to act. In addition, it is work- ing on a defense/industrial-base ini- tiative. Both an infrastructure and defense package would include some form of Buy America language man- dating the use of domestic steel, iron and other related materials.
Tax reform—Regardless of the infra- structure package’s cost or scope, it will draw attention to a top priority for manufacturers: comprehensive tax reform. On the campaign trail, Candi- date Trump promised a 15-percent cor- porate tax rate. As his economic team continued to take shape, discussions drifted closer to the House GOP posi- tion of a 25-percent flat rate for C-Cor- porations, but questions still remain about how to address businesses that pay at the much higher individual rate.
Many predict some form of inter- national tax reform to pass, allowing overseas companies to repatriate their profits, thereby increasing U.S. tax rev- enue. A 50-50 chance usually is given to business-tax reform, which would include C-Corporations and cover active income from passthrough busi- nesses such as S-Corporations and partnerships that pay taxes at the indi- vidual income tax rate. In this scenario, a 25-percent C-Corporation and 28 to 30-percent pass-through rate is feasi- ble. Experts believe that going much lower for either increases the deficit and would possibly require significant entitlement cuts, a move that Trump himself does not appear to support.
To achieve a lower rate, Washington will eliminate a number of deductions and credits used by businesses and individuals. Lawmakers are considering keeping the R&D Tax Credit and allow- ing for 100-percent business expensing; eliminating the need for Section 179 Equipment Expensing and Bonus
Depreciation. The outlook for full indi- vidual tax reform for all rates and types of income remains difficult politically as that would provide “tax cuts for Wall Street.”
Roll back regulations—The roll back of regulations emerged as a central theme for Candidate Trump and in many ways contributed to his victories in the Midwest and Rust Belt states. Directives from the executive branch come in several forms, some of which are easier to reverse than others. Any executive orders issued under President Obama are easily reversible by the new White House with the stroke of a pen. However, should the new administra- tion want to reverse an Obama rule, the relevant agency must issue a new regulation to replace the previous. This includes a public-comment period and possibly hearings prior to the final reg- ulation taking effect, where it also could meet legal challenges by environmental and health groups.
EPA regulations issued under the
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