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Proposed Estate Tax Repeal and Multiple Tax Breaks

Posted on: May 5th, 2017
trumpThe Trump Administration released updated tax proposal terms in late April that closely match the proposals made prior to Election Day last year. If adopted, these tax reform provisions would offer substantial benefits to business owners and the wealthy.

The proposed tax changes include:
  • Repeal of the federal estate tax
  • Repeal of alternative minimum tax (AMT) (individual and corporate)
  • Repeal of many itemized deductions, while preserving deductions for retirement contributions, charitable donations, and mortgage interest
  • Repeal of 3.8 percent net investment income tax (NIIT), which two active proposals are currently calling for by the end of the 2017
  • Exemption of foreign income tax. A one-time incentive (the terms of which are currently unclear) would be added to attract transfer of foreign cash to domestic financial institutions. Note: Some news outlets cite this exemption, but a copy of the White House memo has not yet become available to verify.
  • Reducing the business tax rate to 15 percent. This would apply to large and small businesses, including self-employed persons and sole proprietors. The rate would also extend to pass-through entities, such as large partnerships and hedge funds, among others.
  • Reducing the number of tax brackets from seven to three
  • Doubling the standard individual exemption to $24,000 (for married couples filing jointly)

Financial analysts cited by the New York Times and CNN don’t anticipate that Congress will pass the proposed reform. One of the widely-heated topics surrounding Trump’s presidency is his refusal to reveal his tax returns. Without reviewing his tax returns and comparing his tax obligations to his tax reform proposal, lawmakers and the public cannot verify if conflicts of interest exist.

As the nature of tax law is unpredictable, tax planning efforts must be regularly reviewed. Some lawmakers are requesting permanent changes to the tax code, but according to the New York Times, current Senate rules could impose expiration on tax cuts after a decade.

For updates on tax law changes, subscribe to our blog. To review concerns with a tax attorney, schedule an asset evaluation.
 
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