President-Elect Trump’s Impact on Your Taxes
While some are happy and some are protesting the election of Donald Trump as our next president, one thing is certain: Changes will be made to the tax and business climate. Many are speculating about what might happen, but no one really knows what President-Elect Trump’s administration or the Congress will propose and will pass. So far the domestic markets have responded positively to the possibilities they see in the future. Europe is taking a “wait and see” posture. Both sides of the aisle agree that some sort of infrastructure initiative is necessary.
We would like to share our thoughts about the future:
- Overall, we might see a broadening in the tax base subject to tax, but we probably will not see a drastic reduction in everyone’s taxes. Enhanced child-care deductions are likely, as are lowered tax rates and faster write-offs for capital investments. That said, there might be an absolute cap on the amount of itemized deductions allowable, which is why we are skeptical about the likelihood of seeing tremendous reductions in taxes.
- Lifting some of the regulations on businesses might make it a bit easier for you to operate and plan for the future. By lifting or moderating some of the regulations under discussion, more new businesses will have a smoother road to success. Likewise, existing business can act more “business-like” and less defensive.
- There will be some effort to further eliminate estate and gift taxes for all but the wealthiest of our clients, but it is possible that many people will end up paying more money in taxes related to assets passed between generations. The trade-off will occur because we suspect that adjustments to the income tax basis (for determining gain or loss on the eventual disposition of those assets) will remain the original cost plus capital improvements the original purchaser paid for those assets.
What can you do now?
1. Be watchful and pay attention to not only the rhetoric but also the actual proposals that are floated by those who will be in control of the executive and legislative branches.
2. Be attentive to state and local proposals for both legislation and regulation so you won’t be surprised by state-level changes.
3. Spend time evaluating the human, structural, social, and intellectual capitals of your business and how a changing environment might change your strategies related to each. For instance:
- Mind your human capital by considering whether proposed changes in regulations will change the way you will deal with your employees. How will changes to the Affordable Care Act (or repealing the Affordable Care Act entirely) impact you? See your employee benefits purveyor to help understand these changes.
- Protect your intellectual and structural capital. Think thru innovations and other technical issues in your industry. How does technology affect the way you get things done? Are you cyber-secure?
- What about social capital? Be sure you are speaking to your customers and your vendors about how, if at all, your relationship with them will be impacted by changes that might occur in Washington or your local State House. Keep your customers informed about changes that might come about in your industry that could affect their ability to utilize your value.
Regardless of whether you are celebrating or grieving the new administration, now is a great time to spend a minute and evaluate where you are and where you want to go. The currents move on, even if we want to stand still.
We are thinking about these things and more at Rose, Snyder & Jacobs, and we want to help you be intentional and understand the future so that we can work together to make the best decisions. We stand ready to assist you as you consider what the next four years or more might look like for you, your family, and your businesses.