Friday, November 11, 2016

A new Tax world!

All the talking heads are now speculating what changes will be made to the tax code as a result of the Trump victory. Since NOTHING is certain at this point I can only list the things that others have said will likely happen.  Here’s a partial list:

All the taxes brought in with Obamacare will go away when that law is shot out of the saddle, which will happen sooner rather than later. The Net Investment Income Tax, Cadillac Plan Tax, and the penalties for having no insurance will evaporate.

The top corporate tax rates (which usually hit small businesses hardest) will be reduced to some level on par with what the multinationals end up paying. Trump has suggested 15% but it will probably end up around 28%

Small business income that is passed through to owners such as S Corp or LLC income will be taxed at lower rates in the hands of the owners, in an effort to square the rates with large C corporations.

Individual rates will drop, but whatever that top rate is (33%?) you will arrive there sooner.

The Alternative Minimum Tax (AMT) will be repealed, but total Itemized deductions will be capped at some level.

Trump has called for the repeal of the estate tax, but talk is that the current system may be retained with higher exemptions or tossed out but with a capital gains tax on appreciated assets over a certain threshold. The proposed Regulations curtailing some valuation discounts that were to be effective 1/1/2017 will be pulled.

There will be changes to the system of taxing multinational corporations to encourage them to bring their profits into the country rather than leaving them offshore to avoid tax.

Any changes to the tax code, regardless as to when they enact the law(s), will be retroactively effective to 1/1/2017.

I personally think you will see some big changes at IRS.  John Koskinen, the embattled IRS Commissioner, will likely resign. I would not be surprised to see the IRS’ budget restored to better levels. Without the burden of the ACA on its back that alone will free up a lot of resources, but after a period of time the Republicans in Congress who have been choking off the IRS in response to the Tea Party scandals will likely relax their grip, and a businessman in the White House will likely figure out that funds used for enforcement and to track down scofflaws is money well spent.

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