Last week, President Trump provided a blueprint for tax reform. Although not comprehensive, his April 26 proposal, as announced by Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn, did provide some specifics including those highlighted in the bullet points below:
· The number of federal tax rate brackets would be reduced from 7 to 3 (10%, 25% and 35%)
· The standard deduction for married couples would double (to $24,000)
· The estate tax and the individual alternative minimum tax would be repealed
· The 3.8% net investment income tax on incomes above a certain threshold would be eliminated
· Families with child and dependent care expenses would experience tax relief
· Many deductions would be repealed but those for mortgage interest paid and charitable contributions would remain
Businesses would also be impacted in the following manner:
· The corporate business tax rate would be reduced from 35% to 15%
· Overseas business would experience a one-time tax (at an undisclosed rate) to encourage repatriating dollars into the United States
· Businesses would be taxed only on their earnings within the United States rather than on worldwide earnings
CBM would like to remind clients and friends of the firm that this blueprint is only a proposal which has not yet become policy. Given the new administration in Washington, DC and the possibility (if not likelihood) of new ideas and compromise on specific areas of tax reform between the White House and Congress, we can only offer proposals as they are announced. There may be many proposals but, as always, the law is the law until it is changed.
As we have always done, our team will continue to stay current with areas of taxation as they are likely to affect our clients and will keep you informed.
Peter B. Reilly, CPA, CVA
President and Managing Partner
Richard E. Morris, CPA, MST
Executive Vice President, Director, Tax Services
Councilor, Buchanan & Mitchell (CBM) is a professional services firm delivering tax, accounting and business advisory expertise throughout the Mid-Atlantic region from offices in Bethesda, MD and Washington, DC.