By K.D. Norris
Brett Karhoff, of Hungerford Nichols CPAs and Advisors, told Wyoming and Kentwood business leaders Wednesday that changes are likely coming to personal and small business taxes in the wake of the election of President-elect Donald Trump — but, he warns, don’t expect quick action.
“We have a new president, not a new tax law, yet,” Karhoff said, speaking Nov. 30 to the Wyoming-Kentwood Area Chamber of Commerce’s Business Briefing Luncheon. Despite having Republican control of the White House, the Senate and the House of Representatives, “Personally, I don’t think they will get it done in a year … maybe not even in this (2-year Congressional) term.”
In a discussion titled “The President’s Tax Plan: What will it mean to your business and family over the next four years?”, Karhoff detailed the existing Republican “A Better Way” plan — so-called the “Blueprint” — which proposes reducing the number of tax brackets; reducing tax rates on capital gains, dividends and interest income; and eliminating the Alternative Minimum Tax.
A key part of the Blueprint for personal taxes, he said, would be to eliminate all itemized deductions except mortgage interest and charitable contributions — pointing out that medical deductions could be on the block, something that could greatly impact seniors.
For business taxes, he said, a key point would include reducing corporate tax rate to 20 percent,
He also detailed some how some of Trump’s election season “contract” with taxpayers are similar or different from the existing Republican plan. (The contract is at donaldjtrump.com/contract)
Trump, according to his contract, would repeal the Net Investment Income Tax and, similar to the Blueprint, the Alternative Minimum Tax. It would also greatly increase the standard deduction for single and married taxpayers, more than doubling it.
For business taxes, Karhoff said, a proposed business tax rate of 15 percent could be good for small business, while a proposed one-time rate of 10 percent for repatriation of corporate profits held offshore could be good for large businesses.
While proposed tax reductions are made clear by both the Blueprint and Trump’s contract, Karhoff said, what is missing is how the revenue side of the federal budget will be balanced — “That may be the surprise in 2017.”
The bottom line for most Wyoming and Kentwood personal and small business taxpayers, Karhoff said, is that people should just watch and wait.
“It is probably worth paying attention to what is going on, what the Trump camp is planning,” he said. “Because I do think it will happen and you need to be prepared. (Changes) will come at some point and you need to be ready. To do that, there are some things you need to think about now, get all your itemized deductions into this year, maybe, into 2016, because in 2017 you may not be able to use them. You need to just watch and plan.”