How Will the Presidential Election Impact Business Taxes in Maryland?News
Posted in on December 28, 2016
A presidential election is always going to have an impact on businesses because of tax policy changes and other regulatory shifts that come from a new president assuming office. However, the unexpected election of Donald J. Trump could usher in unprecedented changes to the business tax code. The Republicans and Donald Trump have put forth proposed tax plans which promise to promote growth and fundamentally alter the way in which businesses are taxed.
While it is unclear exactly what final form tax reform will take when it comes to altering the corporate tax code, it is clear that changes are impending. Anyone who is running a company or who is thinking about starting a business should talk with a Maryland business tax lawyer to find out what changes are occurring; to adjust to tax law modifications; and to take full advantage of any new tax breaks or benefits that are provided to companies.
A Closer Look at the Impact on Business Taxes
President-Elect Trump put forth a proposed tax plan, and congressional republicans have also put forth a proposed tax plan, so it is not certain exactly what a final reform plan will look like. However, some of the changes which could be coming include:
- A substantial decrease in the corporate tax rate: Currently, the corporate tax rate of 35 percent is one of the highest in the world. President-Elect Trump has suggested slashing the corporate tax rate to 15 percent. Congressional republicans in their proposed tax plan have suggested cutting corporate taxes to 20 percent. Trump's plan had originally called for taxing pass-through entities including S-corps at the lower 15 percent corporate tax rate, but later versions of his plan appeared to abandon that proposal.
- Repatriation of offshore corporate profits at a one-time 10 percent tax rate: This would provide a substantial one-time amnesty for corporations which have money parked offshore and which have used inversions to reduce U.S. taxes by acquiring foreign corporations.
- The elimination of certain tax credits: Trump's tax plan would eliminate most tax credits that businesses can currently claim, with the exception of research and development credits. Special interest loopholes, including the carried interest deduction, would also potentially be eliminated under Trump's plan.
- Allow manufacturing companies to expense capital investments instead of depreciating them. This could permit companies to substantially reduce net profit and tax liability immediately when making capital investments in the business.
- Provide tax incentives for providing childcare assistance to employees. The annual cap for companies providing childcare would be substantially increased under Trump's plan.
Because tax reform has not yet passed and, in fact, no formal legislation has yet been introduced, companies will need to monitor the lawmaking process carefully and be ready to adjust their tax strategy.
Attorney Kevin Thorn can provide assistance to companies who want to understand how their tax burden will change and who want to make the most of any favorable laws that save their business money. Contact him as soon as possible so your company will understand its obligations and be prepared to react to changes in the law.Share This Post