Proposed Tax Plan from Trump

It doesn’t matter if you are a Trump supporter or a Clinton supporter. Now that Trump is President, it is good to understand the proposed tax changes.

For individuals:

• Tax rate simplification from today’s 7 brackets to 3 brackets (12%, 25% and 33%)
• Retention of favorable tax treatment on capital gains and qualified dividends
• Repeal of the 3.8% tax on net investment income
• Elimination of the Alternative Minimum Tax (AMT)
• Cap on total itemized deductions to $100,000 for single filers and $200,000 for joint filers
• Increase in the standard deduction to $15,000 for single filers and $30,000 for joint filers
• Elimination of personal exemptions
• Elimination of federal estate, gift and GST taxes, although retention of a tax on capital gains on assets held at death

For businesses:

• Reduction in the current top tax rate of 35% to 15% for corporations
• The owners of pass-through entities, such as partnerships, LLCs and sole proprietorships, could elect application of the corporate tax rate or individual tax rates
• Election for businesses to expense investment in equipment and structures versus depreciation over time. However, if so elected, these businesses could not deduct interest expense

Potential Impact of the proposals as they now stand:

• Those with the high levels of taxable income may see significant reduction in taxes while those with more modest incomes may see little reduction.
• Families with a large number of children could actually see tax increases due to a loss of personal exemptions.
• High income wage earners might elect to form pass-through entities to benefit from the 15% tax rate on businesses (rather than employing the individual, firms would employ the entity).
• Charitable contributions could significantly change with the elimination of the estate and gift taxes.
• A tax on appreciated property held at death would provide an incentive to give assets away during life (better to die penniless), particularly if there is no gift tax.

Trump’s proposals are currently somewhat light on details.  And I want to emphasize that these are just proposals at this point, subject to change and which may never be enacted. However, several are based on tax proposals put forth in the House. With Republicans holding a majority in both the House and Senate, some level of tax reform is likely to move forward, in my opinion.

For more information on commercial real estate leasing or sales, please contact

Forrest Blake  “The Negotiator”
Vice President
NAI Capital
16001 Ventura Blvd., Suite 200
Encino, CA 91436
818-933-2365 direct
310-850-2381 cell
http://naicapital.com/
www.forrestblake.com

DRE License No: 01064174

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