Examining The Tax Implications Of A Trump Presidency

Accounting, consulting and technology firm Crowe Horwath LLP looks at key aspects of President-elect Trump's proposed tax policy and how they will affect your bottom line if Congress should approve them.

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CHICAGO — Following a lengthy and contentious campaign season, the American public has elected Donald Trump as president of the United States. It remains to be seen whether President-elect Trump will preside over significant tax reform, but according to the following summary developed by Crowe Horwath LLP, there are several things to consider across the spectrums of corporate, individual, international, and estate and gift taxation. Crowe is one of the largest public accounting, consulting and technology firms in the U.S.

"As expected, tax policy was a hot button issue on the campaign trail and, conveniently, this election year coincides with the 30thanniversary of the Tax Reform Act, which was the last time sweeping changes were made," said Howard Wagner, Crowe National Tax Services managing director. "With the election of Donald Trump, we'll likely see a push around unraveling the tax code, including significant rate reductions for corporations and individuals, as well as radically changing the current international tax system."

Below are key aspects of President-elect Trump's proposed tax policy and how they will affect your bottom line if Congress should approve them.

Corporate Tax

  • Reduce the top corporate tax rate from 35 percent to 15 percent.
  • Reduce or eliminate unspecified loopholes that benefit special interests as well as deductions made unnecessary or redundant by the new lower corporate tax rate.
  • Allow manufacturing firms immediate expensing of all new business investments in lieu of a deduction for interest expense.
  • Eliminate the corporate alternative minimum tax.
  • For investment managers, tax income from carried interests at ordinary income rates.

Individual Tax

  • Create three tax brackets with rates of 12 percent, 25 percent and 33 percent.
  • Eliminate the tax on net investment income.
  • Cap the capital gains tax rates at 20 percent with a lower rate for individuals not in top brackets.
  • Close unspecified "special interest tax breaks" and cap deductions at $100,000 for single filers and $200,000 for married filers.
  • Eliminate the individual alternative minimum tax.
  • Implement new dependent-care savings accounts to be used for child care, after-school enrichment programs and school tuition, as well as in-home nursing and nursing home care for elderly dependents.
  • Increase the standard deduction to $30,000 for joint filers and $15,000 for single filers with personal exemptions eliminated.

International Tax

  • Tax all earned foreign subsidiary income and impose a one-time 10 percent transition tax on the deemed repatriation of profits of foreign subsidiaries, payable over 10 years.

Estate and Gift Tax

  • Permanently eliminate the federal estate tax.
  • Subject capital assets exceeding $10 million held at death to income tax, and disallow contributions of appreciated assets into private charities established by the decedent or their relatives.

For more information please visit www.crowehorwath.com/lp/2016-presidential-election-tax-policy-resource-center.

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