Will New Corporate Tax Plans Hurt the U.S. in the End?
The winds of change are blowing when it comes to taxes and corporate taxes are no exception. President Trump and the House are both ready to lower the corporate tax rate in an effort to create a more business friendly environment for U.S. companies here in the states. Currently, the corporate tax system is a mess, which is why so many large companies keep so much of their earnings overseas, and that costs the U.S. billions in tax revenue.
The basic premise behind the current administration’s plan is to change the current model of tax on the return to capital into a model that taxes only extraordinary profits. The plan would do this by taxing corporate cash flows. The plan would make three major changes to accomplish this.
Number one, any investment outlays would not have to be depreciated over time, but instead they could be written off during the same year they were undertaken. The next major change would make interest payments to creditors non-tax-deductible. Lastly, in order to continue to promote our county’s competitiveness with the rest of the world, corporations would not have to include export receipts when they calculate their taxable income. On the other hand, they would not be allowed to deduct from their income payments to foreign affiliates and suppliers.
However, there are some who feel this plan could be very detrimental to our nation’s economy in the long run. The first problem is that the change could increase income inequality even more between the wealthy the rest of the country. The tax change could also increase uncertainty, put additional burdens on certain sectors and cause a volatile redistribution of income. The tax change could also hurt the global economy, according to some circles and the long-term of cost of making this tax change could end up causing large tax increases or spending reductions.
Of course, there are two sides to every story, so it remains to be seen what changes are made and how they will affect corporations and our nation’s financial well-being.
https://www.nytimes.com/2017/01/07/upshot/the-major-potential-impact-of-a-corporate-tax-overhaul.html?_r=0
https://www.washingtonpost.com/opinions/trump-and-ryan-are-right-to-tackle-corporate-taxes-but-their-approach-would-do-harm/2017/01/08/e7abd204-d429-11e6-9cb0-54ab630851e8_story.html?utm_term=.fd3e2b28a833
The True Value of Your Company May Be Different From What You Think
The True Value of Your Company May Be Different From What You Think Approaches to Value Intangible Assets Posted: 3/31/11 I’ve received a lot of inquires asking how to value a company that has yet to generate any revenue, has not reached profitability, and yet, it has a substantial history of expenses. Most are start-up…
Does Your Business Need a Buy-Sell Agreement?
Does Your Business Need a Buy-Sell Agreement? What Is Buy-Sell Agreement? Buy-Sell Agreement, also known as a buyout agreement, give the company or other stockholders the option or obligation to purchase the interests of other owners under some specified circumstances called trigger events such as death, departure, or retirement, etc. There are two basic types…
Does Your Company Need a Fairness Opinion?
Does Your Company Need a Fairness Opinion? Although not required by statute or regulation, fairness opinions have become an important component of the board of directors and executives deliberation process as they seek to satisfy their fiduciary duties to shareholders and act with due care in an informed manner. Fairness opinions are prepared for and…
Tax Record Retention Guide
Storing tax records: How long is long enough? Tax Record Retention April 15 has come and gone and another year of tax forms and shoeboxes full of receipts is behind us. But what should be done with those documents after your check or refund request is in the mail? Federal law requires you to maintain…