Emma Gustafson
11/6/2017
Bonus Tax Article
The House Republican tax reform has been the focus of tax news recently. The Hill
assessed the different factors of the reform that are causing the most concern. One of the first
issues that was addressed was the change in tax rates for pass-through entities. The reform
would consider “70 percent of pass-through business’s revenue as wages, taxes a the individual
rate, with the remaining 30 percent taxes as a return on capital at a new rate of 25 percent” (
). The concern with this change is that the new rate will negitavely impact small businesses that
be subject to this change. Senator Ron Johnson analyzes the impact that small businesses will
feel as a result of this rate change stating ” what you really have is a blended rate of about 35.5
percent. That’s a 15 percent differential” (Bolton, A.) in comparison to the tax rates
corporations will have. The change in rate for pass-though businesses will effect IRC Sec.
11(b)(1). The second issue the Senate has found with the House’s tax reform is the change in
the mortgage interest deduction. The proposal would limit the interest mortgage deduction to
the first $500,000 of debt and this new limit would apply to newly purchased homes. The
current limit is $1 million, and the concern with this change is that it would impact those who
are looking to purchase a home in markets that have higher market rates such as California or
