Tax Reform Update
May 17, 2017
By: Ira W. Zlotnick
As many of you know, President Donald J. Trump recently outlined his tax reform plan and while the outline was short on details the current plan provides for various significant changes to the tax code. In particular, the plan calls for:
· A reduction in the corporate tax rate to 15%;
· A reduction of the top individual tax rate from 39.6% to 35% and the consolidation of the tax brackets into a total of three brackets (10%, 25% and 35%);
· The elimination of (i) the 3.8% tax on net investment income, (ii) the Alternative Minimum Tax (AMT), and (iii) various deductions including those for state and local taxes; and
· The repeal of the federal estate tax.
While the proposal targets the federal estate tax, it is silent with respect to both the federal gift tax and a possible capital gains tax at death which was suggested by the President when he was running for office and which would significantly alter the "stepped-up" basis landscape to which we have grown accustomed.
Given the President's difficulty in moving his agenda through Congress in the first few months of his administration, it is difficult to imagine his tax reform plan not being heavily debated and negotiated as details are released and thus we suspect that this proposal may change over the next few months. We will, of course, continue to update our clients as developments occur but you should feel free to reach out to us in the interim.