The Big Six tax reform framework has arrived, sort of. The Big Six officially released “The Unified Framework for Fixing our Broken Tax Code” this morning, in a format (and in many ways content) that resembles the House Republican blueprint from 2016. Although more detailed than the proposal put forward by the Trump administration in April, the Framework leaves a number of key decisions up to the House and Senate tax writing committees. Without further ado, here is a summary of what the Framework contains:

A few initial observations:

Not a Lot of Detail.  While the framework sets forth a rough outline of a tax reform bill, the level of detail contained in the framework and the number of instances where the framework specifically leaves discretion to the tax writing committees indicates that the plan is very fluid at this stage. The one thing that does not appear to be open is a 20% tax rate on corporate income (even with corporate integration?).

There is Still a Lot of Work to Do.  The tax writing committees have been left with the difficult task of coming up with solutions to a number of tricky problems. In the pass-through area alone, the tax writing committees must determine the scope of pass-throughs eligible for the special tax rate (“small and family owned”?) and how to distinguish business income from personal income. The committees may draw on prior proposals in the carried interest reform context (read more about that here) for the latter, but the scope of pass-throughs eligible for the special tax rate will likely be heavily influenced by budgetary constraints. Click here for more on the issues tax writing committees will face when fleshing out the proposal for a special tax rate for pass-through income.

Similarly, the contours of the “partial limitation” on interest deductions and the scope of the full expensing regime may be dictated by revenue concerns.

The Approach to International Taxation Seems Somewhat Equivocal.  The Framework calls for both a shift towards territoriality and (somewhat inconsistently) a foreign minimum tax (more on that here, here and here). The balance between these two may likewise be revenue driven.

What about the Financial Sector?  Although there is nothing in the framework that refers specifically to financial institutions (including banks, insurance companies and investment funds) the framework notes that rules applying to certain industries and sectors will be modernized to “better reflect economic reality.” Does this mean that carried interest is still in play? Will tax reform include some version of the MODA? What about codification (in some form) of the constraints placed on the PFIC insurance company exception reflected in the proposed regulations?

The Game Has Just Begun.  As a practical matter, this framework includes scant information on how the tax writing committees intend to pay for the rate cuts promised by the Big Six. The object here is to provide sufficient information for the budget committees to agree on instructions to include in the budget resolution. Once the budget resolution is passed (and, we’ve been told by Representative Brady (R-TX), only then), we expect the tax writing committees to begin the task of crafting bill text in earnest.

It is certain that as detail begins to emerge on “pay-fors” opposition to the bill will surface.