Change Country

Tax & Assurance Guidance

Key Components of President Trump’s Tax Proposal

Posted on April 27, 2017 by

Clayton & Mckervey

Clayton & McKervey

Share This

The CPAs and tax advisors at Clayton & McKervey, an international certified public accounting and business advisory firm located in metro Detroit, see major changes ahead for businesses and individuals should President Trump’s proposed tax overhaul become law.

The largest and most immediate perceived impact on businesses would be the drop in the highest marginal corporate tax rate from 35 % to 15%, while the top marginal tax rate for individuals is proposed at 35%, down from the current 39.6%.

“For individual business owners, the tax drops could be a significant windfall,” Margaret Amsden, CPA, a shareholder in the tax department at Clayton & McKervey said. “The tax rate on business income reported on tax returns of individuals in pass-through businesses organized as LLCs or Sub-S corporations would drop to 15% rather than being taxed at individual rates. It is not yet clear how the changes to deductions and the closing of “loop-holes” will impact the overall tax burden.”

The President’s plan to repeal the provision of the tax code allowing individuals to deduct state and local income and real estate taxes from their income is expected to have a measurable effect on those who have historically itemized deductions. To offset this in some part, the President’s plan calls for a doubling of the standard deduction.

Individuals in general are expected to see tax changes in the following areas:

  • A drop from seven tax brackets to three: 10%, 25%, 35%
  • Double standard deduction for married filers $24,000
  • Repeal of AMT
  • Repeal of the 3.8% investment tax
  • Repeal of the estate tax
  • Only charitable deductions and home interest itemized deductions will remain.

Back to the proposed business changes, there is an intention to move to a Territorial Tax System, a system that would only tax profits earned in the United States versus the current system that taxes worldwide income. The proposal also provides a one-time lower tax rate on the repatriation of overseas earnings. It should be noted, however, that no specifics have been revealed for either of these concepts yet.

“Many multi-national businesses have accumulated significant earnings overseas. The repatriation proposal would allow companies to bring these overseas earnings back to the United States at a lower tax rate. This proposal is meant to stimulate growth in the U.S. economy,” Sarah Russell, CPA, a shareholder in international tax at Clayton & McKervey, said.

Share This

Related Insights

Meals and Entertainment Rules for 2022 Versus 2023

Understanding meals and entertainment expense deductions can be confusing. See the chart below for a summary of the meals and entertainment rules for 2022 versus 2023.

by Clayton & McKervey

FRF for SMEs: What You Need to Know

The Financial Reporting Framework for Small and Medium Sized Entities is an alternative accounting framework to the Generally Accepted Accounting Principles. FRF for SMEs is based on the principles of US GAAP, but it provides a simpler solution for privately held businesses that are happy with their financial statements just the way they are.

by Ryan Lavoie

2023 Tax Outlook: Breaking Down Legislative Impacts

Tax changes that take effect in 2023 could impact your business, especially when it comes to capital, R&D, and interest expense deductions. The influences behind these reforms are complex, but the two big drivers are provisions of the 2017 Tax Cuts and Jobs Act and the 2022 Inflation Reduction Act. Here are some quick highlights to watch out for going into tax season.

by Tarah Ablett

The Sound of Automation Podcast

Industrial automation businesses are the driving force behind Industry 4.0, and Clayton & McKervey is here to help.

Skip to content