Changing Tax Law Will Take Time
01.06.2017 | Long Island Business News
It may take time for Trump’s agenda to turn into legislation, according to Jude Coard, a partner at Berdon with Long Island operations in Jericho.
“If something were ultimately passed, that’s probably the earliest we will see it,” Coard said at the LIBN forum. “But there will probably be a lot of conversations before.”
Donald Trump has talked about reducing individual tax brackets from seven to three and lowering the top rate, eliminating the estate tax and limiting charitable contributions. He could propose a revamped tax code early on, but change takes time.
“Every time we try to simplify things you have to be careful,” Coard said. “These tax rules were created over many years. If somebody comes in with a sledgehammer and tries to fix it in two months, there will be problems.”
Reducing the number of individual income tax brackets from seven to three could be part of an effort to streamline taxes. The Republicans in the House, however, have their own tax proposals, which Coard said could lead to a “little bit of tension.” Still, both call for reducing top tax rates from 39.6 percent.
Trump wants to leave the 20 percent capital gains tax, while the Republican House majority’s plan calls for taxing them at ordinary rate.
“There may be some negotiations there,” Coard continued. “At worst it would be equal to where it is today. It might be somewhat less.”
Trump could formally propose limiting charitable deductions, which could limit the tax tools that charities have.
“How are charities going to plan their next budget, if that’s up in the air?” Coard continued. “These things have to be done quickly, but carefully.”
Trump has called for abolishing the estate tax, which now kicks in at roughly $5 million for individuals and $10 million for couples.
But he also might eliminate something known as step-up basis for estates, in which the taxable portion is lowered significantly.