Our Mission

Learn who we are and how we serve our community

Leadership

Meet our leaders, trustees and team

Foundation

Developing the next generation of talent

C+CT

Covering the latest news and trends in the marketplaces industry

Industry Insights

Check out wide-ranging resources that educate and inspire

Government Relations & Public Policy

Learn about the governmental initiatives we support

Events

Connect with other professionals at a local, regional or national event

Virtual Series

Find webinars from industry experts on the latest topics and trends

Professional Development

Grow your skills online, in a class or at an event with expert guidance

Find Members

Access our Member Directory and connect with colleagues

ICSC Networking Platform

Get recommended matches for new business partners

Student Resources

Find tools to support your education and professional development

Become a Member

Learn about how to join ICSC and the benefits of membership

Renew Membership

Stay connected with ICSC and continue to receive membership benefits

Government Relations & Public Policy

Background on the House tax reform package

November 3, 2017

Key Items for Retail Real Estate:

  • Expensing: Land and structure are not subject to immediate expensing, only items with a recovery period of 20 years or less
  • Interest Deduction: real estate is exempt from a 30% limitation on interest deductions
  • Like-Kind Exchanges are retained for real property
  • NOLs would only by usable against 90% of taxable income
  • Technical terminations for partnerships is repealed
  • The Historic Rehabilitation and the New Markets Tax Credit are repealed

For Business Taxpayers:

As a hallmark of the proposed House tax reform plan, the tax rate for C corporations will be dropped to 20% to make the U.S. more globally competitive and spur additional investment. This is an important feature for many U.S. retailers who are currently paying some of the highest corporate tax rates. Additionally, the plan changes some of the tax rules to keep jobs, profits, and manufacturing plants in the U.S.

For pass-through businesses, as previously mentioned, the proposed 25%  business income tax rate of creates a number of questions which we will focus on  in the coming weeks of legislative review.   

After months of working to make the case to preserve Section 1031 Like-Kind Exchanges, ICSC is pleased that Congress has acknowledged LKEs as a key aspect of economic growth, one of the stated goals of the House Republican tax reform bill. Also of note, the proposed tax plan preserves the Low-Income Housing Tax Credit.

Individual Taxpayers:

First and foremost, the House plan realigns the incomes tax rates to zero, 12%, 25%, and 35%. With a stated focus on providing a tax cut for middle income Americans the plan continues to maintain a 39.6% for high-income Americans, with that income tax bracket now starting at $1 million. The 35% bracket would begin at $260,000 for married couples and the threshold for a 25% bracket would be $90,000 under the plan. As well, the tax plan increases the standard deduction from $6,350 to $12,000 for individuals and $12,700 to $24,000 for married couples, creating an effective bracket at zero percent. In conjunction with the increase in the standard deduction, the proposal eliminates many of the previous individual deductions but preserves the child tax credit, earned income tax credit, and charitable deductions. These changes will be effective for tax years beginning in January 2018. The top capital gains rate remains unchanged at 20%.  

Over the last few weeks as the House has prepared for the unveiling of H.R. 1 the Tax Cuts and Jobs Act, the federal deduction for State And Local Taxes (SALT) has been one of the most high profile provisions under consideration. As introduced the SALT deduction is preserved up to $10,000 for individuals, which was a concession for several members of Congress from high tax states such as New York, New Jersey, California, Maryland and Illinois. The SALT deduction for business was not impacted in H.R. 1. However, many members in the previously noted states are still not satisfied and have committed to continue to fight this issue. The National Council of State Legislatures views this proposal as essentially an elimination of the SALT deduction, an infringement on states’ rights and is committed to continue to fight. This will be an ongoing conversation.

In a move to provide simplification, the House Republican plan eliminates the Alternative Minimum Tax which will prevent taxpayers from having to calculating their taxes twice. As well, the plan provides immediate relief from the estate tax by doubling the exemption and fully repealing the estate tax after six years. We are continuing to review the legislative text to understand whether the step-up in basis for descendants is preserved. ICSC is pleased that family-owned businesses will no longer have to worry about double or triple taxation from Washington when they pass down their life’s work to the next generation.

Of note, H.R. 1 lowers the on the mortgage interest deduction to $500,000 for newly purchased homes and phases-out the exclusion from gross income up to $500,000 for joint filers ($250,000 for other filers) of gain on the sale of a principal residence. The National Association of Home Builders and the National Association of Realtors oppose these changes.

Phillips Hinch

Vice President, Tax Policy