FOR BREAKING NEWS VISIT WWW.QNS.COM SEPTEMBER 7, 2017 • THE QUEENS COURIER 31
Tax reform a priority in Congress
Call Now & End Your Tax Nightmare!
Co-Author of the
best selling book
“Breaking the Tax Code”
Salvatore P. Candela, EA, ATA, ABA
Enrolled Agent - Tax Advisor
BY JOHN SAVIGNANO, CPA
GOP tax writers and their staff are
busy working on a proposal for overhauling
the federal tax system, which
they expect to release after the August
recess.
Will the business tax rate be cut to
15%?
No. Despite President Trump’s Promise
to slash the current 35% corporate rate
to 15%, this won’t fly with congressional
Republicans. There just aren’t enough
revenue raisers to offset such a low rate,
especially now that the projected savings
from the repeal of Obamacare are no
longer in the mix and the controversial
border adjustability tax has been taken
off the table. GOP lawmakers will initially
aim for a 20% to 25% rate in their tax
plan, which they’ll also apply to owners
of pass-through businesses and self-employeds.
But it wouldn’t surprise us if, at
the end of the day, they settle for 28%.
Will firms be able to fully expense
their asset purchases?
It’s doubtful. Although this ambitious,
business-friendly proposal has been
floated in the past, Republican tax writers
are now talking about unprecedented
capital expensing. In tax terms, this
means more bonus depreciation or a
higher asset expensing cap, not unlimited
expensing. But lobbying firms will
still fight ferociously for this break.
What’s going to happen to the tax rates
for capital gains and dividends?
Odds are they’ll stay the same: 15%
maximum rate for most individuals,
with 20% for upper-incomers. It’s too
soon to forecast how any tax reform
package world affect the special 0% rate
in effect for filers in the 10% and 15%
brackets.
And expect the 3.8% net investment
income surtax to remain on the
books. GOPers hoped to nix this tax
on upper-income individuals as part
of their efforts to repeal Obamacare.
Although some Republicans are pressuring
their leaders to use tax reform to get
rid of this and other health taxes, that’s a
hard sell… partly because finding money
to offset the cost of the taxes is an impossible
dream.
Is it true that the home mortgage interest
deduction will be preserved?
Yes. Republicans have repeatedly
promised to save this popular write-off.
But tightening’s are possible, such as
axing the write-off for second homes or
lowering the current $1-million ceiling
on home acquisition indebtedness. Any
changes would exempt existing mortgages
and refinancing’s of outstanding debt.
And the break might not be as valuable if
standard deductions are raised.
What about
the charitable deduction?
This Break may actually get expanded.
At present, only itemizers who file
Schedule A can write off gifts they make
to charity. We’ve heard lawmakers are
pondering whether to grant the deduction
to all taxpayers, even those who
take the standard deduction, to encourage
more charitable giving.
Avoid Business Failure. Take the time
to layout a sound financial plan and you
will increase the odds of success for your
business.
The beginning of your business venture
is not a time to spend money frivolously.
You need to cut costs upfront
while your business is getting off the
ground. Think of spending in terms
of investment. Before making purchases
think about return on investment.
Avoid giving up equity and make sure
to protect your assets. Invest in a good
accounting system and keep a strict budget
to make sure you don’t overspend.
Accounting software lets you analyze
and determine where you may need to
cut. Need more money? To get a loan, you
need a good credit rating and the bank
has to be willing to lend you funds. Look
for a time when the market is up. Then
the bank is more willing to offer additional
funding options. However, always
be prepared for hard times. Set aside
money from business profits for emergencies.
Business is unpredictable and
you need to be ready if something goes
wrong. Think about if your business stop
making money and how long you could
survive.
John Savignano is a partner with
Savignano Accountants & Advisors
located at 47-46 Vernon Blvd., Second
Floor, in Long Island City. If you have
any questions or require additional
information, please call John at 718-
707-0955.
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JOHN J.
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