President Trump Proposes 20% Corporate Tax Reduction

Presidential corporate tax plan

One of President Trump’s campaign promises was to lower the corporate tax rate that businesses are required to pay each year. His proposal is to cut the corporate tax by 20% (from 35% to 15%) for businesses across the board—from large corporations to smaller pass-through entities (i.e. LLCs and S-Corporations).

The President’s proposal has not been received wholeheartedly. Complaints have come in questioning Trump personally stating that the proposed cuts are just a way to line his own pockets and benefit the wealthy.

Advocates for Trump’s plan say these complaints (for the most part) are coming from pundits, politicians and others who are not small business owners.

According to some small business owners, corporate taxes are a major drag on their bottom line. Currently, the list of taxes most US businesses are required to pay each year include:

  • Affordable Care Act tax
  • Alternative minimum tax
  • Business, Professional, Occupational License tax (BPOL Tax)
  • Federal income tax
  • LLC fees
  • Payroll taxes–Social Security and Medicare
  • Payroll taxes–State Unemployment Insurance
  • State income tax
  • Sales tax
  • Tangible Personal Property tax

With these and other taxes, some business owners argue that local and state governments tax nearly half or more of their pass-through entity’s profits each year.

What’s more, the government can make it difficult for some businesses to pay out some of this money, say come businesses owners. For example, small businesses that offer 401Ks must shell out roughly $4,000 per year to a firm to calculate and process the paperwork to defer the taxes owed on their 401K funds.

Additionally, to keep up with processing yearly tax returns most businesses hire an accounting firm which can cost upwards of $10,000 each year.

Will President Trump’s proposed corporate tax cut solve everyone’s problems?

Unlikely. However, advocates say it could be a favorable step toward making the tax environment more level for small businesses.

Continue following MaxFilings for updates on other small business issues – like which states are the best (and worse) to start a business.

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