November 6 marked the midterm elections and changes came and went. Democrats took over the majority in the house, while the republicans increased their majority in the Senate. You might ask, how does this affect taxes, well the answer very well might be substantial.
In a recent interview President Trump said he was always willing for new ideas, zeroing in on potential tax cuts for middle class America. A common question would be, “Where would the excess money come from so the government could afford the tax cuts?” Well surprisingly, President Trump indicated he would be open to raising the corporate taxation rate.
Many people will remember the lower corporate tax rate as a selling point during President Trump's campaign for office. One big factor was that many parts of Europe and other developed countries were offering lower rates than the previous thirty-five percent part of the United States. Once the corporate tax rate lowered to twenty-one percent it was significantly lower than other countries. Perhaps, the idea behind this is, that since the corporate tax rate is no so much lower than other countries (5-8%), a small increase could allow the government to lower the income tax brackets for middle class America.
It will be important to keep an eye on potential changes to your personal or clients’ tax brackets given the uncertain future. One thing is for sure, there is a possibility of more changes. If you have questions contact us at the Center for Financial, Legal & Tax Planning, Inc.