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UPDATED: Details and Analysis of
The Nunes Plan to Reform Business
By Michael Schuyler
In early 2015, the Tax Foundation released a paper that examined a business tax reform
plan developed by Representative Devin Nunes (R-CA).1 Using the Tax Foundation’s Taxes
and Growth (TAG) Model, we estimated the growth and revenue effects if the plan were
enacted. Since then, Rep. Nunes has refined his proposal. The thrust of the plan remains the
same as before – reduce tax biases that discourage business activity and simplify the tax
treatment of businesses – but some of the provisions have been clarified or modified.
This paper is an update of the earlier one in two senses. It models Rep. Nunes’ revised plan.
It also employs a newer version of the Taxes and Growth Model. The results here supersede
the earlier ones.
Representative Devin Nunes (R-CA) seeks to reform the federal government’s tax
treatment of business income. Major elements of his plan are:
· Cutting the corporate income tax to 25 percent;
· Limiting the top tax rate on non-corporate business income to 25 percent;
· Allowing businesses to deduct investment costs when they occur (full expensing);
· Eliminating most business tax credits and many deductions;
· Moving to a territorial tax system like most developed nations;
· No longer letting nonfinancial businesses deduct interest costs but no longer
taxing them on interest receipts;
· Applying the same tax-rate l