In the last seven months, the 2016 presidential election results brought optimism to many closely-held business owners who foresaw the promise of lower taxes from the new administration. However, that optimism is turning into impatience as the government’s summer recess looms.
According to a recent CNBC/SurveyMonkey Small Business Survey, small business owners’ number one concern is taxes and 25% of them listed taxes as the most critical issue facing their business.
Our post-election blog detailed some of the proposed changes by the new administration. Here’s a recap:
- Maximum tax rate of 15% on income from pass-through entities
- Lower capital gains tax rates, which will allow for selling business owners to increase their after-tax return
- Elimination of the estate tax
Each of these proposed changes are clearly pro-business, and would serve to significantly reduce the tax burden of closely-held business owners.
As we continue to consult with our clients throughout these summer months, our clients remain optimistic, yet impatient. As the news headlines are dominated by other issues, it’s becoming more apparent that tax reform is not the current focus of the administration. If you couple the lack of focus on tax reform with the impending August recess, business owners are becoming anxious that the assumed tax cuts may not occur in 2017.
While we hope that we will have more clarity in the fall about new tax rules, complete tax reform seems unlikely. That said, we are keeping an eye on smaller changes which would reduce taxes, if not in the form of a complete tax overhaul. Of course, we will continue to keep you updated as changes may arise.
We look forward to discussing your business’ best planning approach as we start the 2017 year-end tax planning process in late summer and early fall.