President Donald Trump signed a tax reform bill, giving corporate America a major tax cut along with a package of temporary cuts for other businesses and most people.
The bill cuts the corporate tax rate to 21 percent from 35 percent and cuts individual tax rates across the board. So if your corporation has net profit, your tax rate as a proportion of net profit will be lower than it was years before. Trump believes this will make US corporations more competitive in the global marketplace. He has felt that because if the high percentage of taxes that the United States Corporations have to pay, it reduces the competitive capacities of these United States Corporations. Trump said the bill will bring abandoned factories back to life. He said Bob Kraft, owner of the New England Patriots, called him to say he was buying a new paper mill in North Carolina because of the tax law. Of course, this is just one event. This will have to be developed in the coming months to see if that is the case. President Reagan preached the “trickle down effect” in the 1980s, let’s see if this idea works in the real world.
In this case, a tax rate of 21% is significantly lower than the tax rate of 35%. For high-income individuals with LLCs that are not deemed entities, a change to establish a C Corporation can, if properly formed, reduce your taxes by thousands of dollars. Also, if your health insurance costs are high, this tax planning strategy can help you spend your health insurance within the corporate structure.
Overall, the bill is expected to reduce federal revenue by nearly $1.5 trillion over the next decade. Trump and Republican leaders have said they hope the corporate tax cuts will spur enough economic growth to offset lost revenue. In other words, the federal government is willing to have a temporary drop in revenue for the economy to stimulate economic growth that will more than offset the loss of tax revenue. So this income tax overhaul bill is meant for business owners to save money on their income taxes so they can spend the savings wisely and pump capital into the economy to add more jobs. and more profitable business activities. At the end of the day, the companies that maximize income tax incentives will be the ones that benefit from this new 2017 income tax legislation,