During his presidential campaign, Donald Trump proposed that his tax reform plans would focus mainly on economic growth, creating more job opportunities for American people and uplifting the low- and middle-income families, who barely manage to survive in a changing economy. With these goals, it was clear that POTUS made tax reform a priority.
At a press conference on April 25, 2017, President Trump unveiled his new tax plan to simplify the tax code. In a briefing on April 26, 2017, Gary Cohn, director of the National Economic Council, acknowledged the new tax proposal as “the biggest tax cut and the largest tax reform in the history of this country.”
Accountants, enrolled agents, insurance agents, attorneys, financial planners and bankers: Do you know what the new administration’s tax reform proposal holds in store for your clients and how their businesses or lives would change under it?
Features of the New Tax Plan: A Boon for the Wealthy
The tax plan, titled “Tax Reform That Will Make America Great Again,” listed the goals for tax reform and further outlined the individual and business reforms. Here’s an overview of the features of the plan.
Individual Tax Reforms
Trump says the individual tax reforms included in his new tax plan will reduce loopholes in the taxation system and will benefit of the working poor and middle class, but his proposals include:
- Individual Tax Rates: The top individual tax rate would be decreased from 39.6% to 35%.
- Tax Brackets: The existing seven tax brackets would be reduced to three tax brackets of 10%, 25% and 35%.
- Standard Deduction for Married Taxpayers: There would be a doubled standard deduction for married couples.
- Families with Child and Dependent Care Expenses: Trump says families that bear child and dependent care expenses will get some tax relief, but no details were offered.
- Alternative Minimum Tax (AMT): The new plan repeals the AMT, which only applies to Americans who use deductions and other loopholes and are thus subject to extra reporting requirements.
- Obamacare Tax: The Affordable Care Act’s 3.8% tax on dividends and capital gains would be repealed.
- Death Tax: The Estate tax is called “unfair” and would be repealed.
Business Tax Reforms
In what he claims is a bid to increase the number of job opportunities, and to improve the GDP and health of the U.S. economy, POTUS introduced the following business tax reforms:
- Business Tax Rate: The new tax plan lowers the business tax rate or the corporate tax rate to 15%.
- Overseas Profits Tax: A one-time tax is proposed on overseas profits, along with a shift to a “territorial tax system, where companies only pay U.S. taxes on domestic profits.”
Manage Your Taxes in the Trump Era
Whether or not any of this passes, if your clients have money in the game, you need to understand the changes that could affect them. Join Eli Financial’s webinar, “Tax, Financial and Estate Planning Strategies Under the Trump Administration,” where industry veteran Arthur Joseph Werner, JD, MS (Taxation), discusses the strategies that planning and tax professionals can use for tax, financial and estate planning under the Trump administration’s tax reform plans. Joseph covers how proposed and/or actual changes to the Internal Revenue Code will affect a range of your tax planning, financial planning and estate planning techniques.