What is H.R. 629?
(Updated July 13, 2017)
This bill would permanently cut in half (from 10 years to 5 years), the length of time that S corporations have to pay the built-in gains tax, commonly referred to as the "BIG tax." S corporations, according to the Internal Revenue Service (IRS),
"are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes."
They generally don't pay corporate taxes and are limited to 100 shareholders. C corporations, on the other hand, are taxed separately from, and in addition to, their shareholders. When an S corporation turns into a C or acquires assets from a C, they have to pay the BIG tax for specific types of profits the corporation earned while they were a C corporation.
The same reductions would also be applied to regulated investment companies and real estate investment funds.
Argument in favor
Would free up S corporations' access to capital, which in turn could spur economic growth and create more jobs.
Argument opposed
This bill is an undisguised tax cut for big business and would increase the federal deficit by $1.5 billion over the next decade.
Impact
S corporations operating in the United States; shareholders of S corporations; the IRS.
Cost of H.R. 629
The CBO estimates that enacting the bill would reduce revenues, thus increasing federal deficits, by $1.5 billion between 2015 and 2025.
Additional Info
""These are common sense reforms of our current tax code that would help proven job creators — S Corporations — to access the capital they need to grow, compete nationally and globally, and get Americans back to work."
"Hard working Americans should be able to use the money they earn to provide for their families and enjoy the benefits of their labor, not give it away to their government because of an outdated and overly-burdensome tax code."
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