Although details of President Trump based on prior statements tax proposals have not yet been released and this is mere speculation, here are a few of the anticipated tax reform proposals:
- Double the standard deduction;
- Eliminate itemization deductions (other than contributions to retirement savings, charitable contributions and mortgage interest although this could be limited);
- Eliminate the alternative minimum tax;
- Reduce number of tax brackets from seven to three (10%, 25% and 35%);
- Relief for families with child and elder care and dependent expenses, but dependent deduction (personal exemptions) may be eliminated;
- Eliminate estate and gift taxes, but it is expected there could no longer be an allowance for step-up in basis for estates over $10 million. Presently there are no taxes on the appreciation of the property of the deceased from the date of acquisition to the date of death.
- 15% business tax rate (which may result in more business owners forming an LLC or S corporation or not selling their business) instead of the present rates which are greater;
- One-time tax on corporate profits earned in overseas countries;
- Eliminate tax breaks for special interests;
- Territorial tax system so more jobs and companies would stay in the United States;
- Eliminates the corporate alternative minimum tax.
Although the plan generally gives Americans tax relief, the concern is that it would add to the deficit which is likely to weaken the dollar and raise interest rates.
If it adds to the deficit, it would likely have a hard time passing the Senate as that would require sixty votes for passage of the bill (since it adds to the deficit). Furthermore, not all benefit from the anticipated tax reform – especially if you have many dependents or itemized tax deductions. Of course, even if these are the actual tax reform proposals, there would be much negotiation before any passage as learned by the lesson of the failure to pass a bill to repeal and/or replace the Affordable Care Act (Obamacare).
Also, as our maintenance members know, we will contact clients on our maintenance program if their existing estate plan is affected by tax reform. We now offer our maintenance program for as low as $60-$75 per month.