The American people have decided, and the election outcome paves the way for President-elect Donald Trump with a Republican-controlled Congress to push through key aspects of his ambitious policy agenda. Trump’s victory increases the likelihood that expiring tax provisions in the 2017 Tax Cuts and Jobs Act (TCJA) will be either extended or made permanent. We can expect major changes to both tax and economic policies to begin to take shape early next year.
Below are some of the key highlights of what a Trump administration might mean for employers, businesses, and the U.S. economy:
Business Tax:
- Lower corporate tax rate down to 20%, with an even lower preferential rate of 15% for businesses that produce goods in the United States.
- Restore 100 percent bonus depreciation
Individual Tax:
- Make permanent the Section 199A – 20 percent deduction for pass-through business income
- Extend TCJA individual income tax cuts
- Reinstate unlimited SALT deduction
- Eliminate tax on Social Security benefits
- Eliminate tax on tip income and overtime pay
- Consider new middle-class tax cut, possibly a payroll tax cut
- Create a tax deduction for auto loan interest on cars made in the U.S.
Consider replacing personal income taxes with increased tariffs
Estate Tax:
- Make the estate tax cuts under the TCJA permanent.
Tariffs and Trade:
- Impose a 10 to 20 percent baseline tariff on all U.S. imports
- Impose a higher 60 percent tariff on all goods from certain foreign adversaries
- Impose a 100 to 200 percent tariff on cars imported from Mexico
- Impose a 100 percent tariff on companies that do not use the U.S. dollar and do not produce goods in the U.S., but sell within the United States
Revenue Raisers:
- Focus on economic growth that will offset the cost of tax cuts without revenue offsets
Tronconi Segarra & Associates will provide additional updates and insight as tax legislation begins to take shape next year.
