House Republicans released a sweeping tax reform bill that would overhaul individual and business taxes. The Tax Cuts and Jobs Act is now in mark-up in the House Ways and Means Committee and represents a major step forward in the tax reform process.

The bill generally represents a shift from the current worldwide tax system to a territorial approach. The new approach would see most US companies foreign earnings generally being exempt from tax. However, the bill complicates the picture with several overlapping anti-base-erosion provisions. A one-time tax on unrepatriated earnings is also used as a transition and revenue raiser.

There are clearly still many hurdles to enactment, and the proposals will evolve as the process moves forward. Still, the House bill represents a significant starting point for a potential full tax reform bill that would have far-reaching implications for taxpayers of all income levels.

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