Washington Outlines Its Vision of Tax Reform by Edward N. Cooper, CPA
Posted on September 28, 2017
by
Edward Cooper
On September 27, 2017, President Trump and top Republican leaders unveiled the latest round of updates to what they see as the future of the Tax Code. While it remains to be seen whether the tax reform package in its current state will become the law, it is important for taxpayers to understand what the framework entails. Following is a broad overview of the new framework. If you have questions about how these reforms impact you, please contact your tax advisors and accountants.
Individual Taxes
- Reduce the current seven tax brackets into three with a top rate of 35 percent
- Increase the standard deduction to $12,000 for single tax filers and $24,000 for married couples filing jointly (almost double the current deduction amounts)
- Eliminate personal exemptions that are today worth $4,050 per person
- Preserve deductions for mortgage interest, charitable contributions, and retirement savings while eliminating many other deductions not yet specified
- Preserve tax credits for work and higher education
- Increase the child tax credit, which is currently worth $1,000 per child under 17
- Eliminate the alternative minimum tax (AMT)
- Eliminate the estate tax
Business Taxes
- Reduce the corporate income tax to 20 percent
- Reduce the tax rate on profits earned by small businesses and pass-through entities to 25 percent
- Eliminate the corporate alternative minimum tax
- Apply a new maximum tax rate to income from pass-through businesses
- Allow at least five years of full expensing for capital investment
- Limit the interest deduction for C corporations
- Eliminate the Section 199 manufacturing deduction and other, non-specified deductions
- Preserve the research and development tax credit and the low-income housing credit
- Eliminate the current 35 percent tax on profits that U.S. businesses earn overseas and repatriate or bring back to the U.S.; move to a more territorial system for which U.S. companies would pay taxes solely to the foreign governments where they earn profits
- Impose a new, but unspecified, minimum foreign tax to protect against cross-border income shifting and base erosion
The advisors and accountants with Berkowitz Pollack Brant will continue to monitor tax reform efforts and update our clients as opportunities become clearer.
About the Author: Edward N. Cooper, CPA, is director-in-charge of Tax Services with Berkowitz Pollack Brant, where he provides business- and tax-consulting services to real estate entities, multi-national companies, investment funds and high-net-worth individuals. He can be reached at the CPA firm’s Ft. Lauderdale, Fla., office at (954) 712-7000
or via email at info@bpbcpa.com.
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