Every American taxpayer is waiting to see what specific tax plan Donald Trump will implement as President of the United States. The first part of this blog addressed the differences between Trump’s 2015 proposed tax plan and his current 2016 tax plan. While there are differences, there are, of course, the constants in Trump’s tax proposals, which demonstrate the tax policies that Trump has emphasized as important from the beginning of his presidential candidacy.
The President-Elect would repeal certain business tax expenditures. Both corporations and pass-through businesses would be able to elect to expense investment in equipment, buildings, and inventories, rather than depreciating them over time as the law currently requires. If a business elects to expense costs, it would not be allowed to deduct interest expenses.
Trump’s plan would increase the phase-out rates for the personal exemption phase-out and the limit on itemized deductions. A new deduction would be implemented for child and dependent care expenses, and the earned income tax credit (EITC) would be increased for working parents unable to benefit from the new deduction. The plan would also provide a new form of tax-favored savings account related to child and dependent care expenses, and expand the credit for employer-provided child care.
Both of Trump’s tax plans then and now address:
- Repealing the entire Affordable Care Act (ACA), including all of the ACA taxes;
- Repealing the alternative minimum tax for individuals and corporations;
- Amending the taxation of “carried interest”;
- Repealing the estate tax. The revised Trump plan would eliminate the federal estate, gift and generation-skipping transfer taxes. The plan would also tax capital gains held until death, with an exemption of $5 million ($10 million for married couples); and
- Imposing up to a 10 percent deemed repatriation tax on the accumulated profits of foreign subsidiaries of US companies on the effective date of the proposal. Tax future profits of foreign subsidiaries of US companies each year as the profits are earned. Earnings held in cash would be taxed at 10 percent and other earnings at 4 percent, with the liability for this one-time tax payable over 10 years.
Like most presidential candidates, Donald Trump promised to reduce taxes. But how will he pay for the loss of tax revenue caused by any reduction in taxes? A Tax Foundation study reports that revenue available to operate federal programs would diminish by between $4.4 trillion and $5.9 trillion over 10 years.
With federal spending cut by $1.2 trillion over the next decade, estimated revenue cuts will be much more, causing, the national debt to grow by approximately $5.3 trillion by 2026. This is a substantial increase of 105 percent based on an estimate by the nonpartisan Committee for a Responsible Federal Budget.
Of course, this is subject to change.
It is wise to consult with an experienced and knowledgeable tax professional to help any taxpayer in the New York or Tri-State area, whether an individual or business, assess their current tax situation looking ahead to an uncertain tax future. If you have any question about taxes, especially in planning ahead for 2017, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation call 212-490-0704.
