U.S. Sen. Bill Nelson (D-FL), a senior member of the Senate Finance Committee, today filed several amendments to the Senate Republican tax bill, which begins its markup in committee today.
The amendments, aimed at a broad range of issues, would, among other things, make it easier for seniors and small business owners to file their taxes without a paid tax professional by providing access to simplified filing forms, allow citrus growers to deduct the cost of replanting trees lost to citrus-greening and lower income-tax rates for anyone making less than $170,000 per year.
Nelson plans to offer the amendments during the Finance Committee’s markup of the tax bill this week.
Following is a complete list of the amendments Nelson filed with more information on each:
- Nelson Amendment #1: Encourage small business job growth. Nelson’s amendment would encourage small businesses to hire more workers by allowing small business owners to deduct the employer’s portion of payroll taxes for new hires for the first 12 months. New hires must be employed for at least nine months of the year to qualify for the deduction.
- Nelson Amendment #2: Lower tax rates for middle-class and low-income Americans. Nelson’s amendment would cut income tax rates for anyone making less than $170,000 per year. The current GOP plan would establish four income tax brackets for individuals making less than $170,000. Nelson’s amendment would consolidate those four brackets to three and lower the tax rates for each by roughly five percent. For example, individuals making less than $9,525 would see their tax rates cut from 10% to 5% under Nelson’s amendment, while individuals making $60,000 – $170,000 would see their rates go from 25% to 20%. Nelson’s amendment would consolidate the two brackets being proposed for individuals making between $9,525 and $60,000 and create just one bracket with a rate of 10%. [See chart below]
- Nelson Amendment #3: Emergency Citrus Disease Response. Nelson’s amendment would help Florida’s citrus growers start the process of replanting tens of millions of trees lost to citrus-greening. Citrus greening has killed more than 160,000 acres of citrus trees in Florida since 2005, and is threatening to wipeout Florida’s $11 billion citrus industry. Nelson’s amendment would allow growers to immediately deduct the full cost of planting new trees, instead of having to spread that cost out over a 14-year period.
- Nelson Amendment #4: Identity Theft and Tax Fraud Prevention. Nelson’s amendment is identical to the stand alone bill he filed earlier this year to combat tax-related identity theft by increasing penalties for both identity thieves and professional tax preparers who fail to keep taxpayers’ personal information secure. It also directs the IRS to create and implement a more streamlined process for handling ID theft cases to get victims their refunds faster. If approved, the amendment would increase the maximum fine for filing a fraudulent tax return with someone else’s identity from $100,000 to $250,000. It also increases the penalty for tax preparers who fail to protect their clients’ information from $250 per incident to $1,000.
- Nelson Amendment #5: Increase deductions for small businesses. The amendment increases a new pass-through deduction for small businesses from 17.4 percent, as proposed in the current GOP plan, to 25 percent of qualified business income. The deduction would be capped at $50,000.
- Nelson Amendment #6: Provide free online tool for small business owners to file taxes online.The amendment directs the IRS to work with the private sector to create a free online tool to help small businesses fill out their tax forms and file returns electronically – without the need of expensive tax professionals. The tool would guide small business owners through the tax filing process, and provide a user-friendly interface to help them determine their tax liability and eligibility for certain tax breaks. The amendment seeks to help small businesses save money by reducing the administrative burden and cost of tax compliance.
- Nelson Amendment #7: Reinstate personal exemptions. The current GOP plan eliminates personal exemptions for taxpayers, currently worth $4,050 per person. Nelson’s amendment would reinstate personal exemptions.
- Nelson Amendment #8: Increase taxes on corporate profits stashed overseas. Nelson’s amendment would impose a 20 percent minimum tax on the foreign earnings of a corporation made through a foreign affiliate located in a tax haven country. A tax haven country is defined as any foreign country if the effective foreign tax rate of the foreign affiliate is equal to or less than 12.5 percent.
- Nelson Amendment #9: Seniors’ Tax Simplification. Nelson’s amendment would allow seniors to file a 1040EZ to make it easier for them to complete their taxes. Currently, seniors over the age of 65 may not file their income taxes on the simplified Form 1040EZ and must use the more complicated Form 1040 or Form 1040A instead. This is because most seniors earn income through Social Security and other retirement benefits, as well as interest and capital gains on investments, and likely qualify for a special tax credit for the elderly and disabled.
The following chart shows the tax brackets and rates being proposed under Nelson’s Amendment #2, compared to the current tax rates (column 1) and those being proposed in the current version of the GOP tax bill (column 2):
