The future of US Tax Law under Donald Trump
Since Donald Trump became President Elect of the United States, there have been many discussions around his suggested tax reforms amongst political commentators and tax experts alike. From initial discussions, many businesses are set to benefit from tax cuts under a Trump government which is hoped will lead to a boost in the US economy. Whilst immediate tax revenues would decline, it is foreseen that lowering both corporation and capital gains tax would lead to the creation of new businesses whilst boosting consumer spending. Here at International Tax Search, we believe that Trump will follow through and create tax reforms which are highly favourable of entrepreneurs and their businesses. However, it must be noted that the economic benefit of tax reform may not reach those in poor lower-middle income families and more must be done to ensure that economic benefit is widespread rather than for a concentrated few.
Steve Forbes, the Chairman of Forbes Magazine, recently penned an opinion piece outlining his suggested tax reform under the new government.
“The incoming administration should expand its tax package when it formally takes office. As Ronald Reagan did with his tax reform in 1986, it should reduce the brackets to two: in this case, 25% and 10%; it should also cut the levies on capital gains from 23.8% (this includes a 3.8% ObamaCare add-on) to 15% or less. Revenues would go up, as they always do when this tax is reduced. Do the same with dividends. Combined with slashing the tax on profits for corporations and so-called passthroughs to 15%, these measures would help stimulate the creation of new businesses, not to mention energizing consumers and investors. Progress is impossible without investment, and that can't happen without capital creation.
Substantially expanding exemptions for adults and children would neuter the inevitable Democratic charge of favoring the rich. Boosting the earned-income tax credit, which gives rebates to low-income earners, even if they owe no income tax, would also minimize political fallout. In fact, it would be politically wise to pretend that the Democrats made this happen.”
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