It is with great pride and much enthusiasm that I announce on behalf of the partners of the firm the promotion of Rene Verghese, as Schulman Lobel’s newest partner.
This is a true success story for the firm, as Rene joined us 11 years ago as a junior accountant with a huge desire to learn, progress, and achieve. Rene’s stellar record of client satisfaction, coupled with her keen marketing skills and tax expertise have been the primary ingredients to her success.
To Clients, Friends, and Family,
One of the campaign promises made by President Trump was unveiled last week. On Wednesday April 26, 2017, the President released his broad-stroke vision of a tax reform plan, the 2017 Tax Reform for Economic Growth and American Jobs. The outline calls for significant tax rate cuts and simplification of the federal income tax filing process.
While pundits and others attempt to project the benefits and costs of the vague plan, we feel it is too early to take any action at this time. While the plan calls for the lowering of individual and corporate tax rates, certain valuable deductions may be eliminated (such as state, local and real estate taxes at the individual level).
Some of the Presidents proposal includes the following:
- Tax Rates: Condense the current multi-tiered income tax brackets to three income tax brackets at 10%, 25%, and 35%. The taxable income ranges for the new rates have not been disclosed at this time.
- Standard Deduction: Doubling the standard deduction to simplify tax filings in conjunction with eliminating certain itemized deductions.
- Itemized Deductions: Elimination of all itemized tax deductions except mortgage interest and charitable contributions. The loss of many itemized deductions would move many more taxpayers to the standard deduction. Individuals located in high taxing states and with high real estate taxes, such as NY, NJ, CA, and CT would be impacted the greatest. Also, losing the medical expense deduction may prove difficult for many.
- Elimination of refundable individual credits such as the earned income tax credit, the additional child tax credit and the American Opportunity Tax Credit are being considered.
- Elimination of targeted tax breaks for wealthy individuals. No news has been distributed on this topic.
- Repeal of the 3.8% net investment income tax on investment income of higher income taxpayers.
- Unspecified tax relief for families with child and dependent care expense.
- Repeal of the Alternative Minimum Tax (AMT).
- Elimination of the Federal Estate Tax. However, the treatment or the retention of the gift tax has not been addressed. There would be a replacement of the estate tax with a carry-over basis rule.
- Corporate Taxes: Reduction of the corporate tax rate from a maximum 35% to a flat 15%.
- Small Businesses: The President has proposed a 15% tax rate on pass-through income for owners of S Corporations, partnerships, LLCs, and sole proprietorships. Note, under the plan, upon distribution of assets, a second layer of tax would be imposed similar to dividends now taxed to C Corporations. There is discussion, but no information, to prevent pass-through owners from converting compensation income taxed at higher rates into profits at the 15% tax rate.
- Repatriation: The Presidents Plan calls for a one-time tax repatriated profits at a yet unspecified rate.
- Territorial Tax Regime: U.S. companies will pay U.S. tax on income related to the U.S.. Further, U.S. companies will not be subject to U.S. tax on the worldwide income concept.
While the broad outline of a proposal put forth by the President are seen as bold moves by many pundits, there are not many details. Many are speculating on what will result. The lack of details makes it difficult to determine what benefits, if any, individuals or companies may be provided.
The President plans to have a number of listening sessions throughout the month of May as his administration further develop their proposal. In the meantime, we must all patiently wait for Congress to act on this call from the President. We will be watching what Congress does over the summer months and will keep you advised.
Very truly yours,
Schulman Lobel Zand Katzen Williams & Blackman, LLP
Big thank you all around to the amazing team at Shulman Lobel,CPA for insuring the integrity of the VOICE ARTS® balloting process. Can’t wait to reveal what’s in those envelopes!