Trump Tax Plan: What You Should Know - Part 3

This provision of the Trump plan is an incredible boon to the Gig economy.  

Freelancers, Independent Contractors, and the Gig worker will be treated as a business and taxed as a business; at a maximum of 15%.

Non-Corporations and the Gig Economy

“This lower tax rate cannot be for big business alone; it needs to help the small businesses that are the true engine of our economy. Right now, freelancers, sole proprietors, unincorporated small businesses and pass-through entities get taxed at the high personal income tax rates. This treatment stifles small businesses. It also stifles tax reform because efforts to reduce loopholes and deductions available to the very rich and special interests end up hitting small businesses and job creators as well. The Trump plan addresses this challenge head on with a new business income tax rate within the personal income tax code that matches the 15% corporate tax rate to help these businesses, entrepreneurs, and freelancers grow and prosper.”

This provision of the Trump plan is an incredible boom to the Gig Economy.  Freelancers, Independent Contractors, and the Gig worker will be treated as a business and taxed as a business; at a maximum of 15%.  Imagine, a Gig worker making $100,000.00 a year net.  Instead of a marginal tax rate of 28%, it would be 15% maximum.  If you think the Gig economy is big now, this tax decrease will make everyone want to go towards having a business gig.  Currently, there are over 27 million small businesses in the US with more than 75% having no employee. 

Estate Tax Elimination

Estate tax elimination will make the development of legacy wealth easier to implement, but it is a minor change to the Treasury in term of taxes.  Children, ex-wives, and philanthropy eliminate a lot of inter-generational accumulation already.  

The IRS Data Book 2016 shows 36,000 estate tax returns filed in the fiscal year 2016 with revenue collected of just shy of 20 billion dollars or about ½ of one percent of the IRS collections for the same period.

Personal Income Tax Rates

Did you know: personal income tax when introduced in 1913 was designed only to affect the top 1% of citizens?  In Fiscal 2015, there were over 150 million returns filed for Fiscal 2016 with more than 120,000,000 people paying income taxes or about half of the adults in the country. 

Personal rates are proposed to reduce to the following table:

“For those Americans who will still pay the income tax, the tax rates will go from the current seven brackets to four simpler, fairer brackets that eliminate the marriage penalty and the AMT while providing the lowest tax rate since before World War II:”

Make sure to keep an eye on your email inbox for next week's conclusion to this series.  We will be discussing the unanswered questions surrounding the Trump Tax Plan.

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