Who Win and Lose under Tax Reform? Part I-Winners
- Posted on: Jan 19 2018
Winners
1. Pass-Through Entities. Money earned by partnerships and other types of businesses whose income is passed through to its owners and taxed at the individual tax rate will be taxed at a lower rate, as low as 29.6 percent. Under current law, it could be as high as 39.6 percent. One of the winners are President Trump himself and his son-in-law Jared Kushner, who is part owner of his own real estate firm. They own properties through limited liability companies and the similar.
2. Big Corporations. Industries will benefits from the new corporation rate of 21 percent. For some multinational industries who have trillions of income in tax haven subsidiaries, the tax reform will force them to gradually bring the money home, to be taxed at rates from 8 percent to 15.5 percent, which is lower than the current 35 percent tax rate and the new 21 percent rate.
3. Multimillionaires. Exemption for estate tax raises to $22 million from $11 million for married couples. In addition, the top rate to wages and other income decreases to 17 percent from 39.6 percent.
4. Private Schools and those who can afford them. Parents could use 529 plan to save for their children’s elementary and secondary education. 529 plan is now eligible for college only.
5. Tax Accountants and Lawyers. The simplifying tax code was planned to make it easier for taxpayers. However, the rushed reform will probably create numerous new opportunities for tax preparers. The rushed reform would create a boom in clients who need advice on how to restructure their employment and compensation arrangement to take advantage of the lower tax rates on income from corporation and pass-through entities.
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