We’ve heard the candidates’ positions on several issues during the period leading up to the 2016 Election, and with his win Tuesday night, we’ll be keeping a keen eye on whether President-Elect Trump makes progress on his proposals, especially considering the GOP maintained its majority in the Senate and House of Representatives following Tuesday’s election.
One area we will be paying particular attention to is President-Elect Trump’s vision for his tax plan, which lists the following proposals:
- Reduce taxes across-the-board
- Ensure the rich will pay their fair share
- Eliminate special interest loopholes
- Reduce the cost of childcare by allowing families to fully deduct the average cost of childcare from their taxes
Under our current tax law, there are seven tax brackets, with a top tax rate maxing out at 39.6%. President-Elect Trump’s proposal would reduce that amount to three brackets, as follows :
Married Joint filers:
– Less than $75,000: 12%
– More than $75,000 but less than $225,000: 25%
– More than $225,000: 33%
– Less than $37,500: 12%
– More than $37,500 but less than $112,500: 25%
– More than $112,500: 33%
President-Elect Trump also plans to retain the existing capital gains rate structure, increase the standard deduction for joint filers to $30,000 from $12,600 ($15,000 for single filers), eliminate personal exemptions, cap itemized deductions at $200,000, treat carried interest as ordinary income and repeal the 3.8% Obamacare tax on investment income.
President-Elect Trump’s proposal also calls for the repeal of the “death tax.” While he is not clear in his proposal whether this specifically means repealing the federal estate, gift, and Generation-Skipping Transfer (GST) taxes or whether these would be replaced with a tax on inherited wealth, we’ll be watching for clarity on these items in the months to come.
As I’m sure you’re aware, President-Elect Trump also plans to repeal Obamacare and replace it with Health Savings Accounts (HSAs). Under his plan, contributions into HSAs would be tax free, allowed to accumulate, allowed to be used by any member of a family without penalty, with any unused balance to become part of the estate of the individual and could be passed on to heirs without fear of any death taxes.
Regarding Social Security benefits, President-Elect Trump’s goal is to keep the promises made to Americans through our Social Security program by having an economy that is robust and growing. To keep the economy robust and growing, he proposes to work with Congress to pass and implement the tax reforms outlined above, renegotiate trade deals, repeal the Affordable Care Act, and implement an immigration reform program.
Unlike the volatility we saw in the market the morning after the election, these proposals will take some time to draft new laws and regulations and move them through Congress. We will continue to monitor President-Elect Trump’s progress on his proposals and will provide updates as they become available. In the meantime, should you have a question about how President-Elect Trump’s proposals may affect your particular situation, please contact your Advisor or a member of the Wealth Enhancement Group.
Investment advisory services offered through CWM, LLC, a registered investment advisor. This information is not intended to be a substitute for specific individualized legal or tax advice nor is an endorsement for a particular candidate or political party. We suggest you discuss your specific legal or tax issues with a qualified advisor.