The stage is set this week in Washington, D.C. where a vote is expected in the Senate on the first major tax reform bill in more than thirty years. The National Marine Manufacturers Association (NMMA) has been closely engaged in the ongoing discussions, as the legislation is likely to have a major impact on the boating industry if signed into law by President Donald Trump.
NMMA supports a number of changes in the tax reform proposal, and has long called for comprehensive tax reform in order to unleash the economic power of manufacturing, and ultimately position the U.S. as the best place in the world to build boats.
Since the initial proposal and passage by the U.S. House of Representatives, the bill has seen a number of changes and new proposals as Congress finds the best path for passage.
A major point of current negotiations is set on the number of tax brackets. While a restructuring of the tax brackets has been agreed upon principle, the number and tax rates are still being negotiated. NMMA has asked for three tax brackets, with rates set at 12%, 25%, and 35%. Proposals from the House and Senate show a significant gap, as the House has called for four brackets at 12%, 25%, 35%, and 39.6%. Meanwhile, the U.S. Senate Committee on Finance has offered a set of seven brackets at 10%, 12%, 22%, 24%, 32%, 35%, and 38.5%.
One of the most significant changes would be to the corporate tax rate, with a decrease from the top corporate tax rate from 35 percent to 20 percent. However, the House version of the bill begins the 20% rate in 2018, whereas the Senate version begins the rate in 2019.
Neither the House nor Senate proposals call for a new luxury tax on new boats. This is a huge win for manufacturers, workers, and the American boater.
The House bill does include changes to the Second Home Mortgage Interest Deduction. Under the House bill, the deduction would not be applicable to second homes, and it would be eliminated not only for boats, but for recreational vehicles, and everything else that had previously qualified as a second home in this category. For primary residences, mortgage interest deduction has been halved from $1 million to $500,000, and there is no deduction for interest on home equity.
The Senate Finance Committee proposal would also move forward with the elimination of the home equity deduction, but it would not alter the rest of the deduction, which includes the application to second homes, boats, and RVs.
Congress still has much work to do in getting a bill through the Senate, negotiating differences between the Senate and House, and getting it across the finish line to the President's desk. NMMA's federal affairs team will continue to be engaged with key Members of Congress and staff as negotiations continue.
Should you have any questions or would like to provide feedback, we encourage you to reach out to NMMA's Director of Federal Government Affairs, Mike Pasko, at firstname.lastname@example.org